Income Taxes

For the three months ended March 31, 2020 and 2019, the Company's income tax expense and effective tax rates based on forecasted pretax income were:



	Three Months Ended March 31,
(in thousands, except for rate)	2020			2019
Income tax expense	$	358		$	1,699
Effective tax rate	(23		)%	11		%

For the three months ended March 31, 2020, the Company reported a loss before income tax of $1.5 million and income tax expense of $0.4 million which resulted in a negative effective tax rate for the quarter. Income tax expense for three months ended March 31, 2020 was due to federal and state income tax expense of $0.4 million, primarily from an increase in the valuation allowance on deferred tax assets of $0.9 million. The increase in the valuation allowance was a result of a reduction in forecasts as of March 31, 2020 of current and future years' taxable income.

The Company assesses the valuation allowance recorded against deferred tax assets at each reporting date. The determination of whether a valuation allowance for deferred tax assets is appropriate requires the evaluation of positive and negative evidence that can be objectively verified. Consideration must be given to all sources of taxable income available to realize the deferred tax asset, including, as applicable, the future reversal of existing temporary differences, future taxable income forecasts exclusive of the reversal of temporary differences and carryforwards, taxable income in carryback years and tax planning strategies. In estimating income taxes, the Company assesses the relative merits and risks of the appropriate income tax treatment of transactions taking into account statutory, judicial, and regulatory guidance.