TABLE TRAC INC

NOTE 6. INCOME TAXES

The income tax provision (benefit) consists of the following for the years ended December 31:

	2017		2016
Current tax expense	$	78,000	$	(158,000)
Deferred tax (benefit)		(244,000)		294,000
Total income tax expense (benefit)	$	(166,000)	$	136,000

The reconciliation between expected federal income tax rates and the Company’s effective federal tax rates is as follows:

	2017					2016
	Amount		Percent			Amount		Percent
Expected federal tax	$	141,800		34.0	%	$	94,800		34.0	%
Permanent differences		14,500		3.5	%		13,600		4.9	%
State income tax, net of federal tax benefit		11,300		2.7	%		6,300		2.3	%
Reduced DPAD due to amended federal net operating loss carryback refund		0		0.0	%		17,400		6.2	%
Other		(12,600)		-3.0	%		3,900		1.4	%
Tax law rate change		(321,000)		-77.0	%		0		0.0	%
Total	$	(166,000)		-39.8	%	$	136,000		48.8	%

The following table summarizes the Company’s deferred tax assets and liabilities at December 31:

	2017		2016
Current deferred tax asset (liabilities):
Accounts payable and accrued expenses	$	54,000	$	140,000
Accounts receivable		(1,127,000)		(1,629,000)
Allowance for doubtful accounts		44,000		68,000
Prepaid expenses		(110,000)		(55,000)
Deferred revenue		554,000		562,000
Net current deferred tax liability		(585,000)		(914,000)
Long-term deferred tax asset:
NOL - federal		-		80,000
NOL - state		24,000		28,000
Foreign tax credit		52,000		47,000
Depreciation		(7,000)		(1,000)
Net long-term deferred tax asset		69,000		154,000
Net deferred tax liability	$	(516,000)	$	(760,000)

The federal net operating loss carryforward at December 31, 2017 is $0 and the various state net operating loss carryforwards is approximately $389,000 which expires between 2025 and 2035 if not used. An allowance for net operating loss carryforward is recorded when the Company believes the amount may not be collected or fully utilized. Management believes the state net operating loss carryforward, is fully collectible or will be fully utilized.