The income tax provision from continuing operations consists of the following:
| | | | | | | |
| Current | | $ | 28 | | | $ | -- | |
| Total | | $ | 28 | | | $ | -- | |
Following is a reconciliation of estimated income taxes at the statutory rate from continuing operations to estimated tax expense (benefit) as reported:
| | | | | | | |
| Statutory rate | | | 35 | % | | | 35 | % |
| Change in valuation allowance | | | (29 | %) | | | (35 | %) |
| Effective rate | | | 6 | % | | | 0 | % |
Net deferred tax assets consist of the following at
December 31:
| | | | | | | |
| Deferred tax assets: | | | | | | | | |
| Federal, state and foreign loss carryforwards | | $ | 794 | | | $ | 1,440 | |
| Deferred revenue | | | 11 | | | | 30 | |
| Federal and state tax credits | | | 757 | | | | 642 | |
| Other | | | 402 | | | | 823 | |
| Total deferred tax asset | | | 1,964 | | | | 2,935 | |
| Less valuation allowance | | | (1,964 | ) | | | (2,935 | ) |
| Net deferred tax asset | | $ | -- | | | $ | -- | |
Federal and state tax credits of $
757,000
included in the above table expire at various dates between
2024
and
2035.
On
December 22, 2017,
the U.S. federal government enacted the Tax Cuts and Jobs Act of
2017,
which, among other provisions, decreases the maximum federal corporate income tax rate from
35%
to
21%
beginning
January 1, 2018.
ASC
740,
Income Taxes, requires all deferred tax liabilities and assets to be adjusted for the effect of a change in tax rates by including such effect in income from continuing operations in the reporting period that includes the enactment date.
In accordance with this guidance, the Company has included a charge to tax expense to decrease the deferred tax asset for the year ended
December 31, 2017
of approximately
$805,000
related to the decrease in the federal corporate income tax rate for future periods. This charge was offset with a change in the valuation allowance recorded related to deferred taxes. This is a non-cash charge to expense in the current year, and does
not
affect the amount of taxes paid by the Company in the current period.
We had a deferred tax asset of approximately
$2.0
million and
$2.9
million at
December 31, 2017
and
December 31, 2016,
respectively. The deferred tax asset has been offset by a valuation allowance in
2017
and
2016
of
$2.0
million and
$2.9
million, respectively, because the company believes that it is more likely than
not
that the amount will
not
be realized.
No
deferred taxes have been provided on temporary differences related to investments in foreign subsidiaries because these investments are considered to be permanent.
As of
December 31,
the following net operating loss carryforwards, if unused as offsets to future taxable income, will expire during the following years:
| | | | | | | |
| 2021 | | $ | 689 | | | $ | 689 | |
| 2022 | | | 849 | | | | 849 | |
| 2034 | | | 2,245 | | | | 2,578 | |
| Total | | $ | 3,783 | | | $ | 4,116 | |
Of the net operating losses detailed above,
$1.5
million are related to net operating losses that CoreCard incurred prior to its acquisition by the company. These net operating losses are subject to Separate Return Limitation Year rules. These net operating loss carryforwards expire in years
2021
We have recognized tax benefits from all tax positions we have taken, and there has been
no
adjustment to any carry forwards (net operating loss or research and development credits) in the past
two
years.
There were
unrecognized tax benefits as of
December 31, 2017
and
2016.
Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were
accrued interest or penalties associated with any unrecognized tax benefits,
was any interest expense recognized during the periods presented. We have determined we have
uncertain tax positions.
We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership equals or exceeds
80%,
as well as individual subsidiary returns in various states and foreign jurisdictions
.