The effective income tax rates differed from the expected Federal income tax rate (
34%
) for the following reasons:
Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities for
financial reporting purposes and as measured by income tax regulations. Temporary differences which gave rise to deferred tax assets and deferred tax liabilities consisted of:
On
December 22, 2017,
the Tax Cuts and Jobs Act (the “
Act”) was signed into law. Among other changes, the Act reduces the corporate federal income tax rate from
34%
to
21%
effective
January 1, 2018.
As a result of the Act, the Company made the determination to revalue its net deferred tax assets, as deferred tax assets and liabilities are to be measured using enacted rates expected to apply in years in which the deferred tax assets and liabilities are expected to be recovered or settled. The revaluation of the net deferred tax asset resulted in the Company’s deferred tax assets being written down by approximately
million with an offsetting reduction in the valuation allowance.
An income tax valuation allowance i
s provided when it is more likely than
not
that some portion or all of the deferred tax assets will
not
be realized. The Company has historically provided a partial valuation allowance on its net deferred tax benefits. As a result of recurring losses in recent years, the Company has reported a full valuation allowance. As of
December 31, 2017,
the Company has net operating loss carry forwards for Federal income tax purposes of approximately
$12
,210,000
which are available to offset future Federal taxable income, if any, that begin to expire in
2021.
The Company also has a net operating loss carry forward for Illinois state income tax purposes of approximately
$15
,082,000
as of
December 31, 2017.
The Company also has alternative minimum tax credit carry forwards of approximately
$148,000,
which are available to reduce future Federal regular income taxes, if any, over an indefinite period.
No
unrecognized tax benefits are set to expire in the next
twelve
months that
may
have an impact upon the Company’s effective tax rate.
The Company files tax returns in the U.S. federal jurisdiction and various state jurisdictions. The tax years
201
4,
2015,
2016
and
2017
remain open to examinations. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. During the
twelve
months ended
December 31, 2017,
the Company did
not
recognize expense for interest or penalties related to income tax, and does
not
have any amounts accrued at
December 31, 2017,
as the Company does
not
believe it has taken any uncertain tax positions.