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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes from continuing operations consists of:
| Year ended December 31, (in thousands)
| 2018 |  | 2017
Current income tax: |  |  |
Federal | $ | — |  |  | $ | — |
State | 293 |  |  | 122 |
Foreign | 41 |  |  | 227 |
| 334 |  |  | 349 |
Deferred income tax: |  |  |
Federal | 12,004 |  |  | 4,029 |
State | 1,805 |  |  | (381 | )
| 13,809 |  |  | 3,648 |
Provision for income taxes | $ | 14,143 |  |  | $ | 3,997 |
The components of (loss) income before income taxes consisted of the following:
| December 31,
| 2018 |  | 2017
United States | $ | (9,820 | ) |  | $ | 2,314 |
Other Countries | (159 | ) |  | (1,927 | )
Total | $ | (9,979 | ) |  | $ | 387 |
The deferred tax expense related to discontinued operations was zero in fiscal year 2018 and an expense of $0.1 million recorded in fiscal year 2017. Deferred tax (liabilities) assets are comprised of the following at:
| December 31, (in thousands)
| 2018 |  | 2017
Deferred tax (liabilities) assets: |  |  |
Software development costs | $ | (1,954 | ) |  | $ | (2,119 | )
Acquired intangible assets | (676 | ) |  | (913 | )
Gross deferred tax liabilities | (2,630 | ) |  | (3,032 | )
Allowances for bad debts and inventory | 2,785 |  |  | 2,958 |
Capitalized inventory costs | 116 |  |  | 109 |
Intangible assets | 420 |  |  | 672 |
Employee benefit accruals | 1,742 |  |  | 1,282 |
Federal net operating loss carryforward | 6,512 |  |  | 4,941 |
State net operating loss carryforward | 2,112 |  |  | 1,540 |
Tax credit carryforwards | 6,176 |  |  | 6,064 |
Foreign currency | — |  |  | 33 |
Depreciation on property, plant and equipment | 373 |  |  | 168 |
Other | 722 |  |  | 727 |
Gross deferred tax assets | 20,958 |  |  | 18,494 |
Less valuation allowance | (18,328 | ) |  | (1,653 | )
Net deferred tax assets | $ | — |  |  | $ | 13,809 |
The Company has Federal tax credit carryforwards of $5.8 million that expire in various tax years from 2029 to 2038. The Company has a Federal operating loss carryforward of $22.8 million expiring from 2029 through 2037 and a Federal operating loss carryforward of $8.2 million with an unlimited carryforward period. None of the operating loss carryforward will result in a benefit within additional paid in capital when realized. The Company also has state tax credit carryforwards of $0.3 million and state net operating loss carryforwards of $0.1 million that expire in various tax years through 2038. In assessing the ability to realize 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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As a result of this analysis and based on the current year’s taxable income, and utilization of certain carryforwards management determined an increase in the valuation allowance in the current year to be appropriate. A valuation allowance is still required to the extent it is more likely than not that the future benefit associated with the foreign tax credit carryforwards and certain state tax loss carryforwards will not be realized. The Company recorded a tax expense associated with an increase of the deferred tax asset valuation allowance of $16.7 million for 2018. The Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result all previously unremitted earnings for which no U.S. deferred liability has been accrued is now subject to U.S. tax. As a result, the Company recorded a one-time reduction of the deferred tax asset of $0.3 million related to the one-time mandatory tax of previously deferred foreign earnings which is payable over an 8-year period. The Company records the benefits relating to uncertain tax positions only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. At 2018, the Company’s reserve for uncertain tax positions is not material and we believe we have adequately provided for its tax-related liabilities. The Company is no longer subject to United States federal income tax examinations for years before 2013. The provision for income taxes differed from the provision computed by applying the Federal statutory rate to income (loss) from continuing operations before taxes due to the following:
| Year ended December 31,
| 2018 |  | 2017
Federal statutory tax rate | 21.0 | % |  | 34.0 | %
State taxes | 4.4 |  |  | (0.9 | )
Non deductible expenses | (0.6 | ) |  | 19.4 |
Tax credits | 4.6 |  |  | (90.6 | )
Expired tax credits | (3.9 | ) |  | — |
Stock based compensation | 0.8 |  |  | (69.6 | )
Foreign income tax rate differential | — |  |  | (14.0 | )
Repatriation Tax | — |  |  | 110.5 |
Impact of Tax Cuts and Jobs Act enactment | — |  |  | 1,241.0 |
Valuation allowance | (167.0 | ) |  | — |
Tax return and audit adjustments | — |  |  | (107.3 | )
Contingent purchase revaluation | (1.0 | ) |  | (88.0 | )
Other | (0.1 | ) |  | (1.7 | )
| (141.8 | )% |  | 1,032.8 | %
The effective income tax rate was (141.8)% and 1,032.8% during the years ended December 31, 2018 and December 31, 2017, respectively. The effective tax rate in any reporting period can also be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution. The effective tax rate for the year ended December 31, 2018 was significantly impacted by recording a substantial increase in a valuation allowance on deferred tax assets.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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