The Tax Cuts and Jobs Act (the "Act") was enacted in The Act reduces the U.S. federal corporate tax rate from percent to percent, requires companies to pay a -time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign earnings. As of we have completed our accounting for the tax effects of enactment of the Act; however, in certain cases, as described below, we have made a reasonable estimate of (i) the effects on our existing deferred tax balances and (ii) the -time transition tax. In other cases, we have been able to make a reasonable estimate and continue to account for those items based on our existing accounting under GAAP and the provisions of the tax laws that were in effect prior to enactment. We recognized an income tax expense of in the year ended associated with the items we could reasonably estimate.

 

We are still analyzing the Act and refining our calculations, which could potentially impact the measurement of our tax balances.

 

Loss before income tax expense (benefit) is as follows:

 

		Year Ended December 31, 2017				Year Ended December 31, 2016
Domestic		$	(9,514	)		$	(3,070	)
Foreign			4,601				(12,800	)
Total		$	(4,913	)		$	(15,870	)

 

The expense (benefit) for income taxes consists of the following components:

 

		Year Ended December 31, 2017				Year Ended December 31, 2016
Current income tax (benefit) expense
U.S. federal		$	—			$	—
Foreign			—				—
State and local			(106	)			—
Total current income tax (benefit) expense			(106	)			—
Deferred income tax expense (benefit)
U.S. federal			294				—
Foreign			—				—
State and local			—				—
Total deferred income tax expense (benefit			294				—
Total income tax expense (benefit)		$	188			$	—

 

There were tax benefits for the year ended associated with the exercise of stock options that were recorded to additional paid-in capital. Tax benefits associated with the “windfall” for stock options exercised are determined on a “with and without” basis. On the Company adopted the Financial Accounting Standards Board's ("FASB") ASU - Compensation - Stock Compensation (Topic ): Improvements to Employee Share-Based Payment Accounting ("ASU -) which resulted in impact to the current tax provision in the consolidated financial statements for the months ended as there were excess tax benefits or tax deficiencies on the vested awards.

 

During and the Company issued new non-qualified stock options. The Company has “windfall” in additional paid-in-capital as of The Company recorded a deferred tax expense before valuation allowance of and relating to non-qualified stock option cancellations for the years ended and respectively.

 

A deferred tax expense of and relating to the cumulative translation adjustment of the Company’s foreign subsidiaries financial statements was recorded in other comprehensive (loss) income for the years ended and respectively. An income tax benefit of $() for continuing operations for the year ended was recorded as the result of ASC - intraperiod tax allocation.

 

The Company was subject to income taxes for the year ended and

 

Following is a reconciliation of the Company’s effective income tax rate to the United States federal statutory tax rate:

 

		Year Ended December 31, 2017				Year Ended December 31, 2016
Expected tax at U.S. statutory income tax rate			35.0	%			35.0	%
U.S. state and local income taxes net of federal income tax effect			1.4	%			0.0	%
Foreign rate differential			11.2	%			(6.3	)%
Foreign unremitted earnings			(11.8	)%			(22.5	)%
Foreign tax credit			(31.8	)%			0.0	%
Stock option cancellations			0.0	%			(0.3	)%
Change in valuation allowance			49.4	%			1.6	%
Withholding tax			(14.2	)%			0.0	%
Intra-period allocation			8.2	%			0.0	%
Nondeductible Expenses			(51.2	)%			0.0	%
Other			0.0	%			(7.5	)%
Effective tax rate			(3.8	)%			0.0	%

 

The effect of temporary differences is included in deferred tax accounts as follows:

 

		Year Ended December 31, 2017				Year Ended December 31, 2016
Deferred tax assets:
Accrued compensation		$	21			$	79
Inventory			3				2
Bad debt reserves			28				45
Product performance accrual			12				20
Non-qualified stock option compensation			229				252
Operating loss carryforwards			9,646				10,298
Fixed assets			134				223
Other			40				149
Total deferred tax assets before valuation allowance		$	10,113			$	11,068
Valuation allowance			(8,647	)			(11,068	)
Total deferred tax assets		$	1,466			$	—
Deferred tax liabilities:
Withholding tax			(698	)			—
Foreign unremitted earnings			(1,466	)			—
Total deferred tax liabilities		$	(2,164	)		$	—
Total net deferred tax (liabilities)		$	(698	)		$	—

 

A valuation allowance is recorded on certain deferred tax assets if it has been determined it is more likely than that all or a portion of these assets will be realized. The Company has recorded a valuation allowance of and for deferred tax assets existing as of and respectively. The valuation allowance as of is attributable to deferred taxes in the United States and net operating loss carryforwards in the United States, Spain, China and Hong Kong. The valuation allowance as of is attributable to deferred taxes in the United States and net operating loss carryforwards in the United States, Spain, China and Hong Kong.

 

The Company recognizes interest accrued related to its liability for unrecognized tax benefits and penalties in income tax expense. The Company recorded interest and penalties related to unrecognized tax benefits as a component of income tax expense in the amount of approximately and  for the years ended and respectively. The Company had approximately and for payment of interest and penalties accrued as of and respectively.

 

The Company had liability for unrecognized tax benefits, excluding interest and penalties for the years ended and respectively. The amount of unrecognized tax benefit that would potentially impact the Company’s effective tax rate was (excluding interest and penalties) as of and The Company has open tax years from - with various foreign tax jurisdictions. The Company expects (excluding interest and penalties) of unrecognized tax benefits to reverse within the next months.

 

The Company conducts its business globally and as a result, the Company and or more of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is subject to examination by taxing authorities in each of these jurisdictions.

 

The Company has open tax years for and for U.S. federal tax purposes. An examination in the United States by the Internal Revenue Service for tax year commenced The Company has open tax years from - with various state tax jurisdictions. In connection with the examination of the Company’s tax returns, contingencies can arise that generally result from differing interpretations of applicable tax laws and regulations as they relate to the amount, timing or inclusion of revenues or expenses in taxable income, or the sustainability of tax credits to reduce incomes taxes payable. The Company believes it has sufficient accruals for its contingent tax liabilities. Annual tax provisions include amounts considered sufficient to pay assessments that result from examination of prior year tax returns, although actual results differ.

 

During the Company received an income tax refund of from the Internal Revenue Service resulting from a federal net operating loss carryback.

 

The Company is permanently reinvesting earnings generated in any foreign jurisdiction. The Company periodically assesses its business operations and the cash flow needs of its foreign and domestic subsidiaries to determine if the earnings of any of its foreign subsidiaries will be indefinitely reinvested outside the United States.

 

The Company’s subsidiary in Malaysia is operating under a tax holiday arrangement that extends through The impact of the tax holiday on its effective rate is a reduction in the benefit of and percentage points for and respectively.