The components of income tax expense consist of the following:

 

 

Actual income tax expense differs from statutory federal income tax benefit for the period presented is as follows:

 

Deferred tax assets (liabilities) consist of approximately the following:

 

 

At December 31, 2017, we had U.S. net operating loss (NOL) carryforwards of approximately $117.2 million for U.S. income tax purposes before any Section 382 limitations, The NOLs expire in years 2020 through 2035.  U.S. net operating loss carryforwards cannot be used to offset taxable income in foreign jurisdictions.  In addition, future utilization of NOL carryforwards is subject to certain limitations under Section 382 of the Internal Revenue Code. This section generally relates to a 50 percent change in ownership of a company over a three-year period. Of the $117.2 million of NOLs for U.S. income tax purposes, $88.2 million are expected to expire unutilized. Of the $117.2 million of NOLs for U.S. income tax purposes, $29 million are recorded as gross deferred tax assets.

We provide for a valuation allowance when it is more likely than not that we will not realize a portion of the deferred tax assets.  We have established a valuation allowance for U.S. deferred tax assets due to the uncertainty that enough taxable income will be generated in the taxing jurisdictions to utilize the assets with the exception of the refundable AMT credit carryforward.  Therefore, we have only reflected the benefit of such deferred tax assets in the accompanying consolidated financial statements.  The deferred tax asset decreased by approximately $2,758,000 and $7,395,000 in the years ending December 31, 2017 and 2016, respectively.  The valuation allowance increased by approximately $2,795,000 in the year ending December 31, 2017, and decreased by approximately $7,335,000 in the year ending December 31, 2016.

We reviewed all income tax positions taken or that we expect to be taken for all open years and determined that our income tax positions are appropriately stated and supported for all open years.

Under our accounting policies, we recognize interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense.  As of December 31, 2017, and 2016, we recorded no accrued interest or penalties related to uncertain tax positions.

We have provided for U.S. deferred income taxes as of December 31, 2017 for the undistributed earnings from our non-U.S. subsidiaries.

We are subject to taxation in the United States and various states and foreign jurisdictions. As of December 31, 2017, tax years for March 31, 2015 through December 31, 2017 are subject to examination by the tax authorities. With few exceptions, as of December 31, 2017, we are no longer subject to U.S. federal or state, examinations by tax authorities for years beginning before April 1, 2014. In addition, we are subject to examination by UK and Netherlands taxing authorities for which the fiscal years 2011 - 2017 and 2012-2017, respectively remain open for examination.

On December 22, 2017, the U.S. Tax Cuts and Jobs Act ("TCJA") was signed into law. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. The Tax Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective for tax years starting after December 31, 2017, implementing a hybrid territorial tax system, repealing AMT and making pre-2018 credits refundable, and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. As a result, we recorded tax expense of $3.31M in the fourth quarter as a result of revaluation of the deferred tax assets due to the corporate tax rate change from 35% to 21% starting in 2018. The tax expense was directly offset by a change in the valuation allowance except for $70,000 that was not offset. The Company has $68,000 of AMT credit carryforwards that are expected to be fully utilized due to the credit now being refundable under the TCJA.   The Company calculated a deemed repatriation income amount due to the change to a territorial tax system under the TCJA.  This income can be fully offset with NOLs.  The corresponding deferred tax liability associated with it was reversed. The amounts incorporate assumptions made based upon the Company's current interpretation of the Tax Act and may change as the Company receives additional clarification and implementation guidance.