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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Note 10 – Income Taxes Income tax provision (benefits) are summarized as follows:
| Year Ended December 31, |
(In thousands) | 2018 |  |  | 2017 |  |  | 2016 |
Current: |  |  |  |  |  |  |  |  |  |  |
Federal | $ | (741 | ) |  | $ | (91 | ) |  | $ | — |
State |  | — |  |  |  | (5 | ) |  |  | — |
Total current tax benefit |  | (741 | ) |  |  | (96 | ) |  |  | — |
Deferred: |  |  |  |  |  |  |  |  |  |  |
Federal | $ | 9,872 |  |  | $ | (7,456 | ) |  | $ | (4,091 | )
State |  | 508 |  |  |  | (369 | ) |  |  | (234 | )
Total deferred tax benefit |  | 10,380 |  |  |  | (7,825 | ) |  |  | (4,325 | )
Income tax (benefit) provision | $ | 9,639 |  |  | $ | (7,921 | ) |  | $ | (4,325 | )
Reconciliation of the statutory federal income tax rate to the Company’s actual rate based on income (loss) before income tax benefit is summarized as follows:
| Year Ended December 31, |
| 2018 |  |  | 2017 |  |  | 2016 |
Statutory federal tax rate |  | 21 | % |  |  | 35 | % |  |  | 35 | %
State income taxes, net of federal income taxes |  | 4.5 |  |  |  | 2.0 |  |  |  | 2.0 |
State tax credit |  | — |  |  |  | — |  |  |  | (45.9 | )
State rate adjustment |  | — |  |  |  | — |  |  |  | 2.1 |
Permanent tax differences – stock compensation |  | 22.0 |  |  |  | — |  |  |  | — |
Permanent tax differences – business meals |  | (5.0 | ) |  |  | — |  |  |  | — |
Permanent tax differences – executive compensation |  | (0.2 | ) |  |  | (12.5 | ) |  |  | — |
Permanent tax differences – other |  | — |  |  |  | (17.0 | ) |  |  | 2.4 |
Purchase price allocation adjustment – merger |  | — |  |  |  | — |  |  |  | 3.7 |
Change in valuation allowance |  | (144.5 | ) |  |  | 193.5 |  |  |  | (34.8 | )
FICA credit generated |  | 8.5 |  |  |  | 11.8 |  |  |  | (4.7 | )
Impact of Tax Cuts and Jobs Act |  | (4.8 | ) |  |  | (74.6 | ) |  |  | — |
Change in tax rate and apportionment |  | (4.3 | ) |  |  | — |  |  |  | — |
Deferred only adjustment to beginning deferred balances |  | 17.3 |  |  |  | — |  |  |  | — |
Other, net |  | — |  |  |  | (0.4 | ) |  |  | 4.1 |
Effective tax rate | (85.5%) |  |  |  | 137.8 | % |  | (36.1%) |
The Company’s current and non-current deferred tax assets (liabilities) are comprised of the following:
| December 31, |
(In thousands) | 2018 |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |  |
Accruals and reserves | $ | 3,854 |  |  | $ | 1,571 |
Share-based compensation expense |  | 3,758 |  |  |  | 2,532 |
Alternative minimum tax credit carryforward |  | 741 |  |  |  | 1,483 |
General business credit carryforward |  | 2,447 |  |  |  | 1,126 |
State tax credits |  | 5,500 |  |  |  | 5,500 |
Net operating loss carryforwards |  | 19,156 |  |  |  | 17,350 |
Other |  | 944 |  |  |  | 701 |
|  | 36,400 |  |  |  | 30,263 |
Valuation allowances |  | (23,276 | ) |  |  | (6,983 | )
| $ | 13,124 |  |  | $ | 23,280 |
Deferred tax liabilities: |  |  |  |  |  |  |
Prepaid services |  | (876 | ) |  |  | (884 | )
Amortization of intangible assets |  | (9,519 | ) |  |  | (11,527 | )
Depreciation of fixed assets |  | (5,322 | ) |  |  | (3,082 | )
|  | (15,717 | ) |  |  | (15,493 | )
Net deferred tax assets (liabilities) | $ | (2,593 | ) |  | $ | 7,787 |
Deferred tax assets are evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies. The Company's financial results for the year ended December 31, 2018, include the release of a portion of the valuation allowance recorded against the deferred tax assets of the Company, netted with establishment of a valuation allowance recorded against other deferred tax assets of the Company. The net change in valuation allowance resulted in the recognition of a $16.3 million income tax expense. The Company has performed a continuing evaluation of its deferred tax asset valuation allowance on a quarterly basis. The Company concluded that, as of December 31, 2018, negative evidence outweighs positive evidence for the realization of deferred tax assets and as a result has provided a full valuation allowance against its deferred tax assets. The change during the fourth quarter of 2018 is simultaneous with the Company’s change from an income position to a loss position when analyzing three years of cumulative pretax book income. As of December 31, 2018, the Company had approximately $86.7 million of federal net operating loss carryforwards, which will begin to expire in 2033. These net operating losses have the potential to be used to offset future ordinary taxable income and reduce future cash tax liabilities. However, in connection with the American Acquisition, the Company issued 4,046,494 shares of its common stock to a former American equity holder, which resulted in an “ownership change” under Section 382 that will generally limit the amount of net operating losses the Company can utilize annually. As of December 31, 2018 the Company has concluded that the American Acquisition will not result in a loss of net operating loss nor credit carryforwards. Additionally, the Company had deferred tax assets of approximately $2.4 million related to general business credits. The general business credit carryforward begins to expire in 2037. With the enactment of The Tax Cuts and Jobs Act of 2017, Alternative Minimum Tax credit carryforwards are eligible for a refund. The Company has recognized the resulting refund expected on the 2018 federal income tax return of $0.7 million as income tax receivable on its balance sheet. The remaining $0.7 million is included on its consolidated balance sheet as a deferred tax asset, as it will be refunded on successive returns until the final amount is received on the 2022 federal income tax return. A valuation allowance against the Alternative Minimum Tax credits, which had been previously established, has been released accordingly. During the second quarter of 2015, the Company was notified by the state of California that its audit of the Company for the 2010 tax year had been completed and resulted in no adjustments. During the fourth quarter of 2016, the Company completed an IRS audit for the 2009 through 2013 tax years. The impact of the audit was not material and has been reflected in the financial statements. The 2015, 2016, and 2017 tax years are still subject to examination. The Company has no jurisdictions that are currently under examination. The Tax Cuts and Jobs Act of 2017 (the “TCJA”) reduced the corporate federal income tax rate to 21%, effective January 1, 2018. The Company has completed its accounting for the TCJA. During the year ended December 31, 2018, the Company recognized an additional tax expense of $0.5 million related to the TCJA rate change, compared to $4.3 million for the year ended December 31, 2017. As of December 31, 2018, the Company has no uncertain tax positions.

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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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