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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes |
12. | Income Taxes
Provision for (benefit from) income taxes consisted of the following for the years ended December 31:
|  | 2017 |  | 2016 |
Current |  |  |  |  |  |  |
Federal |  | $ | 19,219,251 |  | $ | 9,161,855 |
State |  |  | 5,336,885 |  |  | 2,664,336 |
|  |  | 24,556,136 |  |  | 11,826,191 |
Deferred |  |  |  |  |  |  |
Federal |  |  | (18,718,113) |  |  | (2,199,180) |
State |  |  | (1,951,238) |  |  | (810,599) |
|  |  | (20,669,351) |  |  | (3,009,779) |
Total provision for income taxes |  | $ | 3,886,785 |  | $ | 8,816,412 |
The Company uses the liability method of accounting for income taxes as set forth in ASC 740. Under the liability method, deferred taxes are determined based on differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. As of December 31, 2017 and 2016, the Company had federal and California tax net operating loss carryforwards of approximately $25.1 million and $28.0 million, respectively. The federal and California net operating loss carryforwards will expire at various dates from 2026 through 2037. Pursuant to Internal Revenue Code Sections 382 and 383, use of the Company's net operating loss and credit carryforwards may be limited if a cumulative change in ownership of more than 50% occurs within any three-year period since the last ownership change. The Company had a change in control under these Sections with the completion of the merger. The Company has performed an analysis of the limitation on the NOLs acquired with the merger and has determined it will be able to utilize all of the net operating losses (“NOLs”) before they expire. Significant components of the Company's deferred tax assets (liabilities) as of December 31, 2017 and December 31, 2016 are shown below. A valuation allowance of $3,385,932 and $0 as of December 31, 2017 and December 31, 2016, respectively, has been established against the Company's deferred tax assets related to loss entities the Company cannot consolidate under the Federal consolidation rules, as realization of these assets is uncertain. The Company's effective tax rate is different from the federal statutory rate of 35% due primarily to remeasurement gains on the Company's stock acquired by NMM and the change in the Federal tax rate.
|  | 2017 |  | 2016 |
Deferred tax assets (liabilities) |  |  |  |  |  |  |
State taxes |  | $ | 1,001,754 |  | $ | 888,867 |
Stock options |  |  | 1,784,524 |  |  | 1,685,965 |
Accrued payroll and related cost |  |  | 185,130 |  |  | 208,576 |
Accrued hospital pool deficit |  |  | 282,913 |  |  | - |
Net operating loss carryforward |  |  | 7,069,776 |  |  | - |
Property and equipment |  |  | (1,286,452) |  |  | (2,009,313) |
Acquired intangible assets |  |  | (28,626,943) |  |  | (44,036,361) |
Other |  |  | (1,941,368) |  |  | (3,669,941) |
Net deferred tax liabilities before valuation allowance |  |  | (21,530,666) |  |  | (46,932,207) |
Valuation allowance |  |  | (3,385,932) |  |  | - |
Net deferred tax liabilities |  | $ | (24,916,598) |  | $ | (46,932,207) |
On December 22, 2017, the U.S. government enacted comprehensive tax legislation known as the Tax Cuts and Jobs Act (the "TGCA"). The TCJA establishes new tax laws that will take effect in 2018, including, but not limited to (1) reduction of the U.S. federal corporate tax rate from a maximum of 35% to 21%; (2) elimination of the corporate alternative minimum tax; (3) a new limitation on deductible interest expense; (4) the Transition Tax; (5) limitations on the deductibility of certain executive compensation; (6) changes to the bonus depreciation rules for fixed asset additions: and (7) limitations on NOLs generated after December 31, 2017, to 80% of taxable income. ASC 740, Income Taxes, requires the effects of changes in tax laws to be recognized in the period in which the legislation is enacted. However, due to the complexity and significance of the TCJA's provisions, the SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. At December 31, 2017, the Company has not completed its accounting for the tax effects of enactment of the TCJA; however, the Company has made a reasonable estimate of the effects of the TCJA’s change in the federal rate and revalued its deferred tax assets based on the rates at which they are expected to reverse in the future, which is generally the new 21% federal corporate tax rate plus applicable state tax rate. The Company recorded a decrease in its deferred tax assets and deferred tax liabilities of $6.6 million and $16.3 million, respectively, with a corresponding net adjustment to deferred income tax benefit of $9.7 million for the year ended December 31, 2017. The Company’s provisional estimates will be adjusted during the measurement period defined under SAB 118, based upon ongoing analysis of data and tax positions along with the new guidance from regulators and interpretations of the law. The provision for income taxes differs from the amount computed by applying the federal income tax rate as follows for the years ended December 31:
|  | 2017 |  | 2016 |
Tax provision at U.S. Federal statutory rates |  |  | 35.0 | % |  | 35.0 | %
State income taxes net of federal benefit |  |  | 4.4 |  |  | 6.0 |
Non-deductible permanent items |  |  | (9.7) |  |  | 6.5 |
Non-taxable entities |  |  | (1.9) |  |  | (3.2) |
Stock-based compensation |  |  | 0.9 |  |  | 0.0 |
Other |  |  | 1.4 |  |  | 2.5 |
Change in valuation allowance |  |  | (2.9) |  |  | 0.0 |
Change in rate |  |  | (19.4) |  |  | 0.0 |
Effective income tax rate |  |  | 7.8 | % |  | 46.8 | %
As of December 31, 2017 and 2016, the Company does not have any unrecognized tax benefits related to various federal and state income tax matters. The Company will recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company is subject to U.S. federal income tax as well as income tax in California. The Company and its subsidiaries' state and Federal income tax returns are open to audit under the statute of limitations for the years ended December 31, 2013 through December 31, 2016 and for the years ended December 31, 2014 through December 31, 2016, respectively. The Company does not anticipate material unrecognized tax benefits within the next 12 months.

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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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