Entity information:
14. Income Taxes
(Provision) benefit for income taxes from continuing operations consists of the following:
 
Year Ended December 31,
 
2015
 
2016
 
2017
Current:
 
 
 
 
 
Federal
$
—

 
$
66

 
$
(448
)
State
(104
)
 
(58
)
 
(302
)
Total
(104
)
 
8

 
(750
)
Deferred:
 
 
 
 
 
Federal
(272
)
 
9,999

 
(5,983
)
State
(32
)
 
1,087

 
(185
)
Total
(304
)
 
11,086

 
(6,168
)
Total (provision) benefit for income taxes
$
(408
)
 
$
11,094

 
$
(6,918
)

The following table presents a reconciliation of the statutory federal tax rate and the Company’s effective tax rate for the years ended December 31, 2015, 2016 and 2017:

 
Year Ended December 31,
 
2015
 
2016
 
2017
Federal
34.0
 %
 
34.0
 %
 
34.0
 %
State
2.5

 
4.2

 
4.7

Non-deductible expenses
1.0

 
5.0

 
1.2

Research credit
(3.2
)
 
(2.3
)
 
(1.5
)
Stock-based compensation
11.0

 
(24.5
)
 
0.1

Change in valuation allowance
(42.5
)
 
(98.6
)
 
—

Deferred tax rate change
0.8

 
0.8

 
16.1

Other
1.9

 
4.0

 
(0.9
)
Total
5.5
 %
 
(77.4
)%
 
53.7
 %

    
The following table presents the significant components of the Company’s net deferred tax assets:
 
Year Ended December 31,
 
2016
 
2017
Deferred tax assets:
 
 
 
Allowance for doubtful accounts
$
95

 
$
48

Accrued liabilities
2,011

 
1,687

Deferred revenue
241

 
395

Intangibles
237

 
166

Stock-based compensation
6,458

 
4,668

Tax credits
2,369

 
2,071

Net operating losses
4,249

 
26

Other
59

 
37

Total deferred tax assets
15,719

 
9,098

Less: valuation allowance
—

 
—

Net deferred tax assets
15,719

 
9,098

Deferred tax liability:
 
 
 
Property and equipment
2,083

 
1,797

Goodwill
654

 
582

Other liability
288

 
193

Total deferred tax liabilities
3,025

 
2,572

Net deferred tax asset
$
12,694

 
$
6,526



The Company’s accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of its net deferred tax assets. The Company primarily considered the historic performance of Bandwidth, the nature of the Company's deferred tax assets and the timing, likelihood and amount, if any, of future taxable income during the periods in which those temporary differences and carryforwards become deductible. Based on an analysis of these factors, the Company determined that in 2017 no valuation allowance against deferred tax assets was required.

As of December 31, 2017, the Company had approximately $2,563 in federal tax credits. If not utilized, the federal tax credit carryforwards will expire at various dates beginning in 2032.

As of December 31, 2017, the Company had approximately $590 in state net operating loss carryforwards. If not utilized, the state net operating loss carryforwards will expire at various dates beginning in 2020.

A limitation may apply to the use of the net operating loss and credit carryforwards, under Internal Revenue Code (IRC) §382 and §383, and similar state tax provisions that are applicable if the Company experiences an “ownership change.” An ownership change may occur, for example, as a result of issuance of new equity. Should these limitations apply, the carryforwards would be subject to an annual limitation.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted into law. The income tax effects of changes in tax law are recognized in the period when enacted. Among its numerous changes to the Internal Revenue Code, the Act reduces U.S. corporate rates from 35% to 21% for periods beginning on or after January 1, 2018. The Company has incurred additional expense of $2,073 due to the remeasurement of the deferred tax assets at the lower corporate tax rate. Other provisions of the Act did not have a significant impact on the Company’s consolidated financial statements for the year ended December 31, 2017, but may impact the effective tax rate in subsequent periods.

Additional federal and state interpretive guidance is still forthcoming that could potentially affect the remeasurement of the deferred tax balance or give rise to new deferred tax amounts. As such, the remeasurement of the deferred tax balance is provisional pending future guidance. Accordingly, the Company is relying on the guidance in the SEC Staff Accounting Bulletin (“SAB”) 118 and has included a reasonable estimate of the effect of the new rules in its Annual Report on Form 10-K while it waits for additional guidance to be released. The final impact may differ from this provisional amount due to, among other things, issuance of additional regulatory guidance, changes in interpretations and assumptions the Company has made, and actions the Company may take as a result of the Act. In accordance with SAB 118 the financial reporting impact of the Tax Reform Act will be completed no later than the fourth quarter of 2018.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
 
Year Ended December 31,
 
2016
 
2017
Unrecognized tax benefits—January 1,
$
456

 
$
671

Gross increases—tax positions in prior period
104

 
—

Gross decreases—tax positions in prior period
—

 
—

Gross increases—tax positions in current period
111

 
64

Settlement
—

 
—

Lapse of statute of limitations
—

 
(4
)
Unrecognized tax benefits—December 31,
$
671

 
$
731



If the $731 of unrecognized tax benefit is recognized, it would impact the effective tax rate.

The Company has not incurred any material tax interest or penalties with respect to income taxes in the years ended December 31, 2016 and 2017.

The Company expects no material changes in the twelve months following December 31, 2017 in its uncertain tax positions.

The Company files U.S. federal income tax returns as well as income tax returns in many U.S. states. The tax years 2008-2010 and 2012-2016 remain open to examination by the major jurisdictions in which the Company is subject to tax due to the carryforward of net operating losses.