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INCOME TAXES | 12 Months Ended
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Dec. 31, 2018
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,
| 2018 |  | 2017 |  | 2016
Federal |  |  |  |  |
Current | $ | (1,902 | ) |  | $ | — |  |  | $ | — |
Deferred | 1,255 |  |  | (15,614 | ) |  | 458 |
| (647 | ) |  | (15,614 | ) |  | 458 |
State |  |  |  |  |
Current | 2,575 |  |  | 301 |  |  | (90 | )
Current benefit of loss carryforwards | (2,307 | ) |  | (28 | ) |  | — |
Deferred | (5 | ) |  | 88 |  |  | 126 |
| 263 |  |  | 361 |  |  | 36 |
(Benefit) provision for income taxes | $ | (384 | ) |  | $ | (15,253 | ) |  | $ | 494 |
During fiscal year 2018, we recognized a $(937) deferred tax benefit related to the Complete acquisition due to a reduction of the valuation allowance. In determining the need for a valuation allowance, we have assessed the available means of recovering deferred tax assets, including the existence of reversing temporary differences. The valuation allowance decreased due to the recognition of additional reversing temporary differences from the $937 deferred tax liability recorded through goodwill on the acquisition. The $937 deferred tax liability related to the Complete acquisition was based on 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. The valuation allowance was reduced by $(1,635) in the quarter ended March 31, 2018, with the offsetting increase in the Complete goodwill, based on initial estimates of the Complete temporary differences. The valuation allowance was increased by $406 in quarter ended September 30, 2018 and $292 in quarter ended December 31, 2018, with an offsetting decrease in the Complete goodwill, based on the availability of better estimates of the Complete temporary differences upon the filing of the prior year returns by Complete’s sellers in the quarter and anticipated net operating loss carryforwards. 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 were not adjusted. 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,
| 2018 |  | 2017 |  | 2016
Federal statutory rate | 21 | % |  | 35 | % |  | 35 | %
Tax at statutory rate | $ | 1,268 |  |  | $ | (12,968 | ) |  | $ | (2,228 | )
State income taxes, net of federal benefit | (89 | ) |  | (1,959 | ) |  | (265 | )
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 the federal rate change in fiscal year 2017 | (1,613 | ) |  | (18,848 | ) |  | 4,370 |
Non-deductible officer compensation | 2,214 |  |  | — |  |  | — |
Deductible stock awards | (2,048 | ) |  | (1,825 | ) |  | — |
Tax credits | (686 | ) |  | (1,000 | ) |  | (1,085 | )
Non-deductible expenses | 633 |  |  | 542 |  |  | 100 |
Other, net | (63 | ) |  | (137 | ) |  | (398 | )
(Benefit) provision for income taxes | $ | (384 | ) |  | $ | (15,253 | ) |  | $ | 494 |
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,
| 2018 |  | 2017
Deferred tax assets: |  |  |
Accrued expenses and reserves | $ | 34,647 |  |  | $ | 26,572 |
Net operating loss carryforwards | 31,241 |  |  | 33,228 |
Book over tax depreciation of property and equipment | 19,048 |  |  | 25,615 |
General business tax credit carryforwards | 6,192 |  |  | 5,439 |
Stock awards | 2,310 |  |  | 1,958 |
Alternative minimum tax credit carryforwards | 1,902 |  |  | 3,804 |
Other | 3,023 |  |  | 2,050 |
Total deferred tax assets | 98,363 |  |  | 98,666 |
Less: valuation allowance | (69,189 | ) |  | (68,355 | )
Total deferred tax assets after valuation allowance | 29,174 |  |  | 30,311 |
Deferred tax liabilities: |  |  |
Amortization of intangibles | (22,026 | ) |  | (20,904 | )
Other | (73 | ) |  | (145 | )
Total deferred tax liabilities | (22,099 | ) |  | (21,049 | )
Net deferred tax asset | $ | 7,075 |  |  | $ | 9,262 |
The net deferred tax asset at December 31, 2018 is reflected on the balance sheet as a long-term deferred federal tax asset of $9,594 and a long-term deferred state tax liability of $(2,519). As of December 31, 2018, we have, for federal income tax purposes, net operating loss carryforwards of approximately $110,586 that expire in the fiscal years ending December 31, 2031 through 2037 and $3,209, which do not expire. We have state net operating loss carryforwards of approximately $86,312 that expire in the fiscal years ending December 31, 2019 through 2038. In addition, we have $1,902 minimum tax credit carryforwards which are fully refundable for tax years 2019 through 2021, if not otherwise used to offset tax liabilities. We also have $6,192 general business credit carryforwards which expire in the fiscal years ending December 31, 2022 through 2038. 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. With the exception of $1,320 federal net operating losses we acquired with the Complete acquisition, 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 an increase of $834 for fiscal year 2018 and a decrease of $(29,234) for fiscal year 2017. 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, 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 assets 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 fiscal years 2018 and 2017 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,
| 2018 |  | 2017
Unrecognized tax benefits at beginning of period | $ | 1,941 |  |  | $ | 3,107 |
Gross increases for tax positions of prior years | — |  |  | 1 |
Gross decreases for tax positions of prior years | — |  |  | (1,165 | )
Reductions resulting from lapse of statute of limitations | (1,939 | ) |  | — |
Settlements | — |  |  | (2 | )
Unrecognized tax benefits at end of period | $ | 2 |  |  | $ | 1,941 |
The fiscal year 2018 reductions resulting from a lapse of the statute of limitations primarily related to unrecognized benefits which had reduced net operating loss carryforwards. The tax positions primarily related to fiscal years 2007 and prior and based on administrative practice of the tax authorities, we have reduced the unrecognized tax benefits. The gross decreases for tax positions of prior years for fiscal year 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, 2018 and December 31, 2017 are $2 and $6, 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 $2 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 2018, 2017 and 2016, we have accrued interest of $2, $3 and $5 and penalties of $1, $2 and $4, respectively. We accrued $(2), $(3)and $(91) for interest and penalties in income tax expense related to uncertain tax positions during fiscal years 2018, 2017 and 2016, 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 2018 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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