This excerpt taken from the TXRH 10-Q filed May 8, 2006.
Accounting for Income Taxes. Our effective tax rate increased in Q1 2006 to 40.0% from 35.3% in Q1 2005. This increase is due to the non-deductibility of certain incentive stock options relating to the adoption of SFAS No. 123R and the charge relating to the application of EITF 04-1. We expect the effective tax rate to be approximately 38.1% for the remainder of 2006.
This excerpt taken from the TXRH 10-K filed Mar 7, 2006.
Accounting for Income Taxes (SFAS No. 109), under which deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying values of assets and liabilities and their respective tax bases. A valuation allowance is established to reduce the carrying value of deferred tax assets if it is considered more likely than not that such assets will not be realized. Any change in the valuation allowance would be charged to income in the period such determination was made. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Prior to converting to a C corporation on October 8, 2004, the Company operated as a limited liability company and was taxed as a partnership. As such, the Companys income or losses were passed through to its owners who are liable for any related income taxes.