Gaia, Inc. Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Our provision for income tax expense (benefit) is comprised of the following:

Variations from the federal statutory rate are as follows:


(in thousands)	2012			2011			2010
Expected federal income tax expense (benefit) at statutory rate of 34%	$	(807	)	$	(12,215	)	$	2,528
Effect of permanent goodwill impairment and worthless stock differences		—			7,668			(114	)
Effect of permanent subsidiary’s acquisition-related costs		—			461			—
Effect of permanent enhanced charitable donation differences		(31	)		(25	)		(260	)
Effect of permanent other differences		106			131			49
Effect of change in financial statement carrying value of investment		(5,077	)		(5,534	)		—
State income tax expense (benefit), net of federal benefit		(40	)		(871	)		238
Federal tax credits		—			(164	)		(16	)
Other		209			(55	)		(42	)
Effect of differences between U.S. taxation and foreign taxation		(35	)		(53	)		(17	)

Income tax expense (benefit)	$	(5,675	)	$	(10,657	)	$	2,366

The components of the net accumulated deferred income tax assets as of December 31, 2012 and 2011 are as follows:


	December 31,
(in thousands)	2012			2011
Deferred tax assets (liabilities):
Current:
Provision for doubtful accounts	$	245		$	306
Inventory-related expense		699			724
Accrued liabilities		3,888			3,530
Charitable carryforward		—			187
Net operating loss carryforward		3,617			2,229
Impaired loans to affiliate		959			—
Prepaid and deferred catalog costs		(250	)		(266	)
Other		(29	)		(24	)

Total current deferred tax assets	$	9,129		$	6,686

Non-current:
Depreciation and amortization	$	288		$	(1,032	)
Section 181 qualified production expense		(4,579	)		(4,414	)
Net operating loss carryforward		13,737			15,975
Charitable carryforward		1,681			1,464
Loss (gain) from change in financial statement carrying value of investment, net		228			(4,849	)
Gain from foreign business acquisition		(347	)		(347	)
Impairment of intangibles		5,412			6,032
Tax credits		899			899
Other		42			(3	)

Total non-current deferred tax assets		17,361			13,725
Valuation allowance		(2,669	)		(1,089	)

Total non-current deferred tax assets, net of valuation allowance		14,692			12,636

Total net deferred tax assets	$	23,821		$	19,322

The sources of income (loss) before income taxes and noncontrolling interests are as follows: