Notes to Consolidated Financial Statements
    

Note 10 - Income Taxes

The following summarizes the provision for income taxes (in thousands):
Year Ended December 31,
 
2000
1999
1998
Current
   Federal
$
(1,063)
$
(189)
$
- 
   State
(2,033)
(56)
(7)
 
(3,096)
(245)
(7)
Deferred
   Federal
- 
- 
- 
   State
- 
- 
7 
 
- 
- 
7 
Income tax benefits credited to
   additional paid-in capital
(9,287)
- 
(1,650)
 
$
(12,383)
$
(245)
$
(1,650)
Provision for income taxes before
   extraordinary item
$
(12,357)
$
(220)
$
(1,191)
Provision for income taxes on
   extraordinary item
(26)
(25)
(459)
 
$
(12,383)
$
(245)
$
(1,650)



Income taxes differ from the amounts computed by
applying the applicable Federal statutory rates due to
the following (in thousands): 		       
Year Ended December 31,
 
2000
1999
1998
Provision for Federal income taxes at the
   statutory rate
$
(17,895)
$
(13,516)
$
(2,907)
(Provision) credit for state income taxes, net
   of Federal income tax benefits
(1,321)
1,516 
(661)
Extraordinary item - gain from retirement
   of debt
(183)
(1,437)
(1,120)
Valuation allowance for deferred tax asset
7,650 
13,305 
3,038 
Other
(634)
(113)
- 
 
$
(12,383)
$
(245)
$
(1,650)


Temporary differences giving rise to deferred income taxes consist of the following (in thousands):      
Year Ended December 31,
       
 
2000
1999
Deferred tax assets        
   Reserves deducted for financial reporting
      purposes not allowable for tax purposes
$
4,450 
$
3,322 
   Compensation deductible for tax purposes
      when paid
1,863 
4,437 
   Net operating loss and alternative minimum
      tax credit carryovers
19,056 
28,147 
   State income tax provisions deductible when
      paid for Federal tax purposes
1,419 
1,314 
   Effect of book/tax differences for joint ventures
(644)
(943)
   Other
(6)
(100)
   Valuation allowance
(25,990)
(33,640)
 
148 
2,537 
Deferred tax liabilities
   Interest capitalized for financial reporting purposes
      and deducted currently for tax purposes
(148)
(2,537)
 
(148)
(2,537)
 
$
- 
$
- 


As discussed in Note 4, the Company implemented a quasi-reorganization effective January 1, 1994. Income tax benefits resulting from the utilization of net operating loss and other carryforwards existing at January 1, 1994 and temporary differences existing prior to the quasi-reorganization, are excluded from results of operations and credited to additional paid-in capital. For the years ended December 31, 2000 and 1998, income tax benefits of $9,287,000 and $1,650,000, respectively, related to temporary differences resulting from the quasi-reorganizarion were excluded from the results of operations and not reflected as a reduction to the Company's provision for income taxes but credited directly to additional paid-in capital. For the years ended December 31, 2000 and 1999, post quasi-reorganization temporary differences which reduce taxable earnings, partially offset by temporary differences that existed prior to the quasi-reorganization, along with pre quasi-reorganization net operating loss carryforwards, resulted in income tax expense, at Alternative Minimum Tax rates, of $3,096,000 and $245,000.

At December 31, 2000 the Company has net operating loss carryforwards for Federal tax purposes of approximately $56,048,000, of which $1,348,000 expires in 2008, $10,501,000 expires in 2009, $14,100,000 expires in 2010, $13,668,000 expires in 2011, $16,403,000 expires in 2012 and $28,000 expires in 2018. In addition, unused recognized built-in losses in the amount of $23,891,000 are available to offset future income and expire between 2009 and 2011. Due to the transactions discussed in Note 4, the future benefits associated with the utilization of the net operating loss carryforwards may be substantially limited.

The Company's federal income tax returns for 1997, 1998 and 1999 are currently under examination by the Internal Revenue Service. Although no assurance can be given as to the adequacy of the amounts accrued, management believes that any income taxes and related interest in excess of the amounts accrued will not have a material effect on the Company's consolidated financial position or results of operations.