Entity information:
NOTE
7
– INCOME TAXES
 
Deferred taxes are recorded based upon differences between the financial statement and tax bases of assets and liabilities and available carryforwards. Temporary differences and carryforwards which gave rise to a significant portion of deferred tax assets and liabilities as of
December 31, 2017
and
2016
are as follows (dollars in thousands):
 
   
December 31,
  
   
2017
    
2016
  
                 
Deferred tax assets:
                
Net operating losses
   $
59,551
     $
74,195
  
Fixed asset basis difference
    
4,559
      
10,662
  
Contributions carryover
    
4
      
5
  
Deferred compensation
    
1,352
      
2,375
  
Accrued liabilities
    
971
      
389
  
                 
Total deferred tax assets
    
66,437
      
87,626
  
                 
Valuation allowance for deferred tax assets
    
(66,437
)
    
(87,626
)
                 
Net deferred tax asset
  
$
-
    
$
-
  
 
 
           The valuation allowance decreased
$21,189,000
and increased
$7,121,000
in
2017
and
2016,
respectively.  The change in deferred tax assets resulted from current year net operating losses and changes to future tax deductions resulting from terms of stock compensation plans, fixed assets, and accrued liabilities.  The
2017
change in deferred tax assets was impacted significantly by the passage of the Tax Cuts and Jobs Act (“TCJA”) enacted in the United States on
December 22, 2017.  
One of the effects of the TCJA is to reduce the effective federal corporate tax rate to
21%,
effective
January 1, 2018. 
The
2017
deferred tax assets above take into account a remeasurement to the new federal tax rate.  The effect to the Company of this new legislation resulted in a reduction in federal deferred tax assets (prior to valuation allowance) of approximately
$30,675,000.
  This provision includes a reasonable estimate of the impact of the TCJA on our tax provision following the guidance of SEC Staff Accounting Bulletin
No.
118.
 
 
As of
December 31,
201
7,
the Company had net operating loss (NOL) carryforwards of approximately
$286.3
million for federal income tax purposes and
$166.3
million for California income tax purposes. Such carryforwards expire in varying amounts through the year
2036.
Use of the carryforward amounts is subject to an annual limitation as a result of a previous ownership change.
 
As of
December 31,
201
7,
the Company possessed unrecognized tax benefits totaling approximately
$2.8
million.
None
of these, if recognized, would affect the Company's effective tax rate because the Company has recorded a full valuation allowance against these tax assets.
 
The Company's tax years
201
4
through
2017
remain subject to examination by the Internal Revenue Service, and tax years
2013
through
2017
remain subject to examination by California tax jurisdictions. In addition, the Company's loss carryforward amounts are generally subject to examination and adjustment for a period of
three
years for federal tax purposes and
four
years for California purposes, beginning when such carryovers are utilized to reduce taxes in a future tax year.
 
A reconciliation of the income tax benefit to the statutory federal income tax rate is as follows (dollars in thousands):
 
   
Year Ended December 31,
  
   
201
7
    
201
6
    
2015
  
                         
Expected federal income tax benefit at 34%
   $
(11,477
)
   $
(8,955
)
   $
(8,163
)
Loss with no tax benefit provided
    
8,156
      
6,918
      
7,389
  
State income tax
    
4
      
4
      
4
  
Non-deductible expenses and other
    
3,321
      
2,037
      
774
  
                         
Income tax expense
   $
4
     $
4
     $
4
  
 
Because it is more likely than
not
that the Company will
not
realize its net deferred tax assets, it has recorded a full valuation allowance against these
assets. Accordingly,
no
deferred tax asset has been recorded in the accompanying balance sheet.