NOTE 11 — INCOME TAXES

 

At December 31, 2017 and 2016 we had deferred tax assets principally arising from the net operating loss carry forwards for income tax purposes multiplied by an expected rate of 21% and 35%, respectively. As management of the Company cannot determine that it is not more likely than not that we will realize the benefit of the deferred tax assets, a valuation allowance equal to the net deferred tax asset has been established at December 31, 2017 and 2016. The significant components of the deferred tax asset at December 31, 2017 and 2016 were as follows (in thousands):

 

 

At December 31, 2017 and December 31, 2016 we had net operating loss carry-forwards of approximately $264.8 million and $252.7 million, respectively, which expire in the years 2021 through 2037.  The change in the allowance account from December 31, 2016 to December 31, 2017 was a decrease of $16.8 million.

 

As of December 31, 2017 and December 31, 2016, the Company had no unrecognized tax benefits.  There was no change in the amount of unrecognized tax benefits as a result of tax positions taken during the year or in prior periods or due to settlements with taxing authorities or lapses of applicable statues of limitations. 

 

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017, which enacts a broad range of changes to the Code. The 2017 Tax Act, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating losses, allows for the expensing of certain capital expenditures, puts into effect a number of changes impacting operations outside of the United States, and modifications to the treatment of certain intercompany transactions.  Our net deferred tax assets and liabilities were revalued at the newly enacted U.S. corporate 21% rate, and the impact was recognized in our financial statements in 2017, the year of enactment. The Company has calculated its best estimate of the impact of the Act in its year end income tax provision in accordance with its understanding of the Act and guidance available and as allowable under SAB 118 as of the date of this filing.  The provisional amount related to the remeasurement of certain deferred tax liabilities based on the rates at which they are expected to reverse in the future is $19.4 million.  We continue to examine the impact this tax legislation may have on our business.

 

The Company and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state jurisdictions.  Without exception, the Company is no longer subject to U.S. Federal, state and local income tax examinations by tax authorities for years before 2013.  The Company is open to federal and state tax audits until the applicable statutes of limitations expire.