Entity information:
Note 9.  Income Taxes

The provision (benefit) for income taxes attributable to income from operations includes the following (in thousands):

  
For the Years Ended December 31,
 
  
2016
  
2015
  
2014
 
Current provision (benefit)
         
Federal
 
$
114
  
$
(902
)
 
$
(1,759
)
State
  
28
   
54
   
(194
)
Total current
  
142
   
(848
)
  
(1,953
)
             
Deferred provision (benefit)
            
Federal
  
155
   
4,333
   
(3,820
)
State
  
37
   
780
   
(215
)
Total deferred
  
192
   
5,113
   
(4,035
)
Total provision (benefit)
 
$
334
  
$
4,265
  
$
(5,988
)

The provision for income taxes related to operations varies from the amount determined by applying the federal income tax statutory rate to the income or loss before income taxes, exclusive of net income attributable to non-controlling interest. The reconciliation of these differences is as follows:

 
For the Years Ended December 31,
 
2016
 
2015
 
2014
Computed expected income tax provision
34.0%
 
34.0%
 
35.0%
State income taxes, net of federal income tax benefit
0.8
 
2.1
 
2.5
Change in valuation allowance for deferred tax assets
(21.5)
 
(61.3)
 
0.1
Cumulative deferred adjustments
(0.3)
 
(0.1)
 
(0.3)
Provision to return adjustments
(0.4)
 
1.3
 
1.1
Other permanent differences
(1.8)
 
(1.1)
 
(0.5)
Dividend and accretion on preferred stock
(19.3)
 
(11.3)
 
(7.5)
FIN 48 liability
0.7
 
(0.8)
 
(0.6)
R&D credit
3.3
 
1.6
 
3.0
Other
(0.4)
 
(0.9)
 
--
 
(4.9)%
 
(36.5)%
 
32.8%


The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015 are as follows (in thousands):

  
December 31,
 
  
2016
  
2015
 
Deferred tax assets:
      
Accounts receivable, principally due to allowance for doubtful accounts
 
$
161
  
$
176
 
Allowance for inventory obsolescence and amortization
  
778
   
623
 
Accrued liabilities not currently deductible
  
2,234
   
2,218
 
Accrued compensation
  
1,006
   
840
 
Deferred rent
  
7,682
   
8,008
 
Net operating loss carryforwards - federal
  
1,301
   
524
 
Net operating loss carryforwards - state
  
405
   
344
 
Federal tax credit
  
533
   
202
 
Total gross deferred tax assets
  
14,100
   
12,935
 
Less valuation allowance
  
(10,499
)
  
(9,027
)
Total deferred tax assets, net of valuation allowance
  
3,601
   
3,908
 
Deferred tax liabilities:
        
Amortization and depreciation
  
(2,696
)
  
(3,307
)
Unbilled accounts receivable, deferred for tax purposes
  
(787
)
  
(589
)
Goodwill basis adjustment and amortization
  
(3,451
)
  
(3,199
)
Telos ID basis difference
  
(58
)
  
(12
)
Total deferred tax liabilities
  
(6,992
)
  
(7,107
)
         
Net deferred tax liabilities
 
$
(3,391
)
 
$
(3,199
)

The components of the valuation allowance are as follows (in thousands):

  
Balance Beginning of Period
  
Additions
  
Recoveries
  
Balance End
of Period
 
             
December 31, 2016
 
$
9,027
  
$
1,472
  
$
--
  
$
10,499
 
December 31, 2015
 
$
1,868
  
$
7,159
  
$
--
  
$
9,027
 
December 31, 2014
 
$
1,901
  
$
--
  
$
(33
)
 
$
1,868
 

We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on available evidence, realization of deferred tax assets is dependent upon the generation of future taxable income.  We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. As such, we have determined that a full valuation allowance is required as of December 31, 2016 and 2015. We are not able to use temporary taxable differences related to goodwill, as a source of future taxable income. As a result of a full valuation allowance against our deferred tax assets, a deferred tax liability (hanging credit) related to goodwill remains on our consolidated balance sheet at December 31, 2016 and 2015.

At December 31, 2016, for federal income tax purposes there was approximately $3.8 million net operating loss available to be carried forward to offset future taxable income. These net operating loss carryforwards expire in 2036. Additionally, approximately $3.8 million of alternative minimum tax net operating loss carryforwards are available to offset future alternative minimum taxable income. These alternative minimum tax net operating loss carryforwards also expire in 2036.  In addition, there was approximately $60,000 of alternative minimum tax credit available to be carried forward indefinitely to reduce future regular tax liabilities.

Under the provisions of ASC 740-10, we determined that there were approximately $762,000 and $803,000 of unrecognized tax benefits, including $233,000 and $210,000 of related interest and penalties, required to be recorded in other liabilities as of December 31, 2016 and 2015, respectively. We believe that the total amounts of unrecognized tax benefits will not significantly increase or decrease within the next 12 months. The period for which tax years are open, 2013 to 2016, has not been extended beyond the applicable statute of limitations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

  
2016
  
2015
  
2014
 
Unrecognized tax benefits, beginning of period
 
$
803
  
$
708
  
$
607
 
Gross (decreases) increases—tax positions in prior period
  
(66
)
  
92
   
105
 
Gross increases—tax positions in current period
  
46
   
38
   
47
 
Settlements
  
(21
)
  
(35
)
  
(51
)
Unrecognized tax benefits, end of period
 
$
762
  
$
803
  
$
708