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INCOME TAXES | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES A summary of the (benefit) provision for income taxes is as follows:
| Fiscal Year Ended December 31,
| 2017 |  | 2016 |  | 2015
Federal |  |  |  |  |
Current | $ | — |  |  | $ | — |  |  | $ | 2,899 |
Current benefit of loss carryforwards | — |  |  | — |  |  | (2,899 | )
Deferred | (15,614 | ) |  | 458 |  |  | 395 |
| (15,614 | ) |  | 458 |  |  | 395 |
State |  |  |  |  |
Current | 301 |  |  | (90 | ) |  | 1,112 |
Current benefit of loss carryforwards | (28 | ) |  | — |  |  | (557 | )
Deferred | 88 |  |  | 126 |  |  | 401 |
| 361 |  |  | 36 |  |  | 956 |
(Benefit) provision for income taxes | $ | (15,253 | ) |  | $ | 494 |  |  | $ | 1,351 |
On December 22, 2017, the Act was enacted. The Act, which is also commonly referred to as “U.S. tax reform,” significantly changes United States corporate income tax laws by, among other things, reducing the US corporate income tax rate from 35% to 21% starting in 2018. Under the Act, federal net operating loss carryforwards generated as of the end of 2017 continue to be carried forward for 20 years and are generally available to fully offset taxable income earned in a tax year. Federal net operating losses generated after 2017 will be carried forward indefinitely, but generally may only offset up to 80% of taxable income earned in future tax years. In fiscal year 2017, we revalued our deferred taxes due to these changes, including (a) revaluing our federal net deferred taxes before valuation allowance using the 21% tax rate resulting in an increased net federal deferred tax provision of $33,700; (b) revaluing our federal valuation allowance using the 21% tax rate, including the impact of tax planning strategies, resulting in a federal deferred tax benefit to continuing operations of ($36,556); and (c) recognizing a federal deferred tax benefit of ($12,758) for 80% of indefinite lived deferred tax liabilities, which are anticipated to be available as a source of taxable income upon reversal of deferred tax assets that would also have indefinite lives. In fiscal year 2016, we elected early adoption of ASU 2016-09 using the prospective transition method related to stock compensation which contains several amendments that simplify the accounting for employee share-based payment transactions. Related to the accounting for income taxes, the new standard eliminates the accounting for excess tax benefits to be recognized in additional paid-in capital and tax deficiencies recognized either in the income tax provision or in additional paid-in capital. Under the new standard, all excess tax benefits and tax deficiencies are recorded in the income tax provision. We recognized no net tax impact upon adoption due to the valuation allowance position and prior periods have not been adjusted. Included in the current state tax provision for fiscal year 2015 is a $180 settlement with New York State, comprised of $168 of tax and $12 of interest. New York State had alleged that we were not permitted to file a single combined corporation franchise tax return with our subsidiaries. We believe that our position related to the filing of our New York State tax returns was correct, and, based on the prior settlement related to 2004 to 2010 tax returns and subsequent favorable litigation related to similar issues, we concluded at December 31, 2014 that no reserve would be required for our New York State filings. During fiscal year 2015, we reached the $180 settlement with the New York State for the tax years ended April 30, 2011 through April 30, 2013 on a basis similar to the prior settlement to minimize out-of-pocket costs. The settlement, which represented less than 8% of the potential cumulative liability for the years settled, was a monetary settlement without any change to our filing combined returns in New York and it closed tax years ending April 30, 2011 through April 30, 2013. Due to a change in law, we have elected to file a single combined corporation franchise tax return with our subsidiaries in New York beginning with 2015. We have not established any reserve under ASC 740 for the tax years ended April 30, 2014 and December 31, 2014, since we believe our position would more likely than not be successful. The differences in the (benefit) provision for income taxes and the amounts determined by applying the Federal statutory rate to income before provision for income taxes are as follows:
| Fiscal Year Ended December 31,
| 2017 |  | 2016 |  | 2015
Federal statutory rate | 35 | % |  | 35 | % |  | 35 | %
Tax at statutory rate | $ | (12,968 | ) |  | $ | (2,228 | ) |  | $ | (3,650 | )
State income taxes, net of federal benefit | (1,959 | ) |  | (265 | ) |  | 198 |
Decrease in net federal deferred tax assets before valuation allowance change due to federal rate change | 33,700 |  |  | — |  |  | — |
Decrease in valuation allowance by 80% of indefinite lived deferred liabilities due to US tax reform | (12,758 | ) |  | — |  |  | — |
Other changes in valuation allowance, including due to federal rate change | (18,848 | ) |  | 4,370 |  |  | 5,272 |
Deductible stock awards | (1,825 | ) |  | — |  |  | — |
Tax credits | (1,000 | ) |  | (1,085 | ) |  | (671 | )
Non-deductible expenses | 542 |  |  | 100 |  |  | 467 |
Non-deductible equity income in subsidiaries | — |  |  | — |  |  | (415 | )
Other, net | (137 | ) |  | (398 | ) |  | 150 |
(Benefit) provision for income taxes | $ | (15,253 | ) |  | $ | 494 |  |  | $ | 1,351 |
Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. A summary of deferred tax assets and liabilities is as follows:
| December 31,
| 2017 |  | 2016
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 33,228 |  |  | $ | 46,846 |
Accrued expenses and reserves | 26,572 |  |  | 32,185 |
Book over tax depreciation of property and equipment | 25,615 |  |  | 30,012 |
General business tax credit carryforwards | 5,439 |  |  | 4,433 |
Alternative minimum tax credit carryforwards | 3,804 |  |  | 3,804 |
Stock awards | 1,958 |  |  | 1,720 |
Other | 2,050 |  |  | 2,806 |
Total deferred tax assets | 98,666 |  |  | 121,806 |
Less: valuation allowance | (68,355 | ) |  | (97,589 | )
Total deferred tax assets after valuation allowance | 30,311 |  |  | 24,217 |
Deferred tax liabilities: |  |  |
Amortization of intangibles | (20,904 | ) |  | (30,296 | )
Other | (145 | ) |  | (99 | )
Total deferred tax liabilities | (21,049 | ) |  | (30,395 | )
Net deferred tax asset (liability) | $ | 9,262 |  |  | $ | (6,178 | )
The net deferred tax asset at December 31, 2017 is reflected on the balance sheet as a long-term deferred federal tax asset of $11,567 and a long-term deferred state tax liability of ($2,305). As of December 31, 2017, we have, for federal income tax purposes, net operating loss carryforwards of approximately $101,187 that expire in the fiscal years ending December 31, 2031 through 2037 and state net operating loss carryforwards of approximately $114,362 that expire in the fiscal years ending December 31, 2018 through 2037. In addition, we have $3,804 minimum tax credit carryforwards which become refundable beginning in 2018 and will be fully refunded, if not otherwise used to offset tax liabilities, in tax year 2021. We also have $5,439 general business credit carryforwards which expire in the fiscal years ending December 31, 2023 through 2037. Sections 382 and 383 of the Internal Revenue Code can limit the amount of net operating loss and credit carryforwards which may be used in a tax year in the event of certain stock ownership changes. We are not currently subject to these limitations but could become subject to them if there were significant changes in the ownership of our stock. In assessing the realizability of carryforwards and other 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. We adjust the valuation allowance in the period management determines it is more likely than not that deferred tax assets will or will not be realized. The change in the valuation allowance was a decrease of ($29,234) for fiscal year 2017 and an increase of $4,582 for fiscal year 2016. In determining the need for a valuation allowance, we have assessed the available means of recovering deferred tax assets, including the ability to carryback net operating losses, the existence of reversing temporary differences, the availability of tax planning strategies, and available sources of future taxable income. We have also considered the ability to implement certain strategies, such as a potential sale of assets that would, if necessary, be implemented to accelerate taxable income and use expiring deferred tax assets. The net deferred tax asset as of December 31, 2017 and net deferred tax liability as of December 31, 2016 include deferred tax liabilities related to amortizable goodwill, which are anticipated to reverse in an indefinite future period and to generate future taxable income upon reversal. Prior to the Act, federal net operating losses, including potential losses from the reversal of deferred tax assets, could only be carried forward for 20 years. The reversal of the indefinite lived goodwill was not available as a source of future taxable income since it was uncertain whether the income generated would be available in the same tax periods in which losses from the reversal of deferred tax assets could be utilized. As such, prior to the Act we did not treat the reversal of amortizable goodwill as an available source of taxable income in determining the valuation allowance. Beginning in 2018 under the Act, future federal net operating losses generated may be carried forward indefinitely and generally may offset up to 80% of taxable income earned in a tax year. Because potential losses from the reversal of deferred tax assets in future years may be carried forward indefinitely, we consider it more likely than not that 80% of the reversal of deferred tax liabilities for amortizable goodwill will be available as a source of taxable income. In the fourth quarter of 2017, we revalued our net federal deferred tax assets using the 21% tax rate as enacted under the Act. The valuation allowance was also adjusted in this quarter due to the federal tax rate change and to recognize a ($12,758) federal deferred tax benefit for 80% of deferred tax liabilities for amortizable goodwill. Due to the Act, we recognized a ($15,614) federal deferred tax benefit in 2017 and decreased our total valuation allowance by ($29,234). We believe we are able to support the deferred tax assets recognized as of the end of the year based on all of the available evidence. The provisions of FASB ASC 740-10-25-5 prescribe the minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. Additionally, FASB ASC 740-10-25-5 provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. Under FASB ASC 740-10-25-5, an entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
| Fiscal Year Ended December 31,
| 2017 |  | 2016
Unrecognized tax benefits at beginning of period | $ | 3,107 |  |  | $ | 3,379 |
Gross increases for tax positions of prior years | 1 |  |  | — |
Gross decreases for tax positions of prior years | (1,165 | ) |  | (2 | )
Reductions resulting from lapse of statute of limitations | — |  |  | (270 | )
Settlements | (2 | ) |  | — |
Unrecognized tax benefits at end of period | $ | 1,941 |  |  | $ | 3,107 |
The gross decreases for tax positions of prior years for fiscal 2017 are due to the reduction in the federal corporate tax rate to 21%. Since the majority of our unrecognized benefits reduce net operating loss carryforwards, the amounts were reduced consistent with the overall rate reduction related to the net operating loss deferred asset. Included in the balances at December 31, 2017 and December 31, 2016 are $6 and $9, respectively, of unrecognized tax benefits (net of the federal benefit on state issues) that, if recognized, would favorably affect the effective income tax rate in future periods. We anticipate $4 of unrecognized tax benefits to reverse within the next 12 months due to the expiration of the applicable statute of limitations. Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. Related to uncertain tax positions during fiscal years 2017, 2016 and 2015, we have accrued interest of $3, $5 and $92 and penalties of $2, $4 and $8, respectively. We accrued ($3), ($91)and ($51) for interest and penalties in income tax expense related to uncertain tax positions during fiscal years 2017, 2016 and 2015, respectively. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. We are subject to U.S. federal income tax, as well as income tax of multiple state jurisdictions. Due to Federal and state net operating loss carryforwards, income tax returns from years ending in 1998 through 2017 remain open for examination, with limited exceptions.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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