NOTE 8 — INCOME TAXES

On December 22, 2017, the United States enacted tax reform legislation through the Tax Cuts and Jobs act, which significantly changes the existing U.S. tax laws, including a reduction in the corporate tax rate for the Company from 34% to 21%, as well as other changes. As a result of enactment of the legislation, the Company incurred a one-time income tax expense of  $49 during the fourth quarter of 2017, related to the remeasurement of the Company’s deferred tax assets and liabilities. The Company, as discussed below, has a valuation allowance recorded against all components of the net deferred tax asset, except for the unrealized loss on available-for-sale securities. Therefore, this additional one-time income tax expense of  $49 is related to the adjustment of the deferred tax asset for net unrealized losses on available-for-sale securities. For the years ended December 31, 2017 and 2016, management did not record any current federal or state income tax expense related to normal operations.

Temporary differences between tax and financial reporting that result in net deferred tax assets are as follows at December 31, 2017 and 2016:

The change in the valuation allowance for deferred tax assets is summarized as follows:

At December 31, 2017, the Company has a net operating loss carryforward for Federal income tax purposes of  $4,996, which is available to offset future Federal taxable income from 2030 through 2037. At December 31, 2017, the Company has a net operating loss carryforward for State of Illinois income tax purposes of  $6,415, which is available to offset future State of Illinois taxable income from 2020 through 2029.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. A valuation allowance has been recorded against all components of the net deferred tax asset, except for the unrealized loss on available for sale securities.

Retained earnings as of December 31, 2017 and 2016 includes approximately $1,593 representing reserve method bad debt reserves originating prior to December 31, 1987 for which no deferred income taxes are required to be provided. Otherwise, the deferred tax liability would be approximately $335 and could be included in taxable income if the Company pays dividends in excess of its accumulated earnings and profits (as defined by the Internal Revenue Code) or in the event of a distribution in partial or complete liquidation of the Company.