The components of our provision (benefit) from income taxes consisted of the following for the fiscal years ended September 30,

	2016			2017			2018
	(Amounts in thousands)
Current provision (benefit):
Federal	$	496		$	2,321		$	8,055
State		73			(366	)		195
Total current provision	$	569		$	1,955		$	8,250
Deferred provision (benefit):
Federal		11,691			10,190			4,205
State		(52	)		2,116			1,513
Total deferred provision		11,639			12,306			5,718
Total income tax provision	$	12,208		$	14,261		$	13,968

During the fourth quarter of fiscal 2017, the Company recorded a net tax benefit of $1.8 million primarily pertaining to a worthless stock deduction. The tax benefit of this deduction was primarily based on the write-off of the Company’s investment in its British Virgin Islands subsidiary for US tax purposes.

On December 22, 2017, the Tax Act was enacted which, among a number of its provisions, lowered the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018. The Company's blended statutory tax rate for fiscal year 2018 will approximate 24.5% as a result of the change in statutory rates. For fiscal year 2018, we recorded a non-cash adjustment to income tax expense of $805,000 for the remeasurement of deferred taxes on the enactment date.

Below is a reconciliation of the statutory federal income tax rate to our effective tax rate for the fiscal years ended September 30,

	2016			2017			2018
Federal tax provision		35.0	%		35.0	%		24.5	%
State taxes, net of federal effect		3.6	%		4.4	%		4.1	%
Worthless stock deduction		—			(4.8	)%		—
Stock based compensation		(0.5	)%		0.2	%		(2.0	)%
Valuation allowance		(3.2	)%		(0.1	)%		(0.3	)%
Foreign rate differential		0.5	%		2.4	%		—
Effect of Federal Tax Reform		—			—			1.5	%
Other		(0.3	)%		0.6	%		(1.6	)%
Effective tax rate		35.1	%		37.7	%		26.2	%

Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. The tax effects of these temporary differences representing the components of deferred tax assets as of September 30,

	2017			2018
	(Amounts in thousands)
Deferred tax assets:
Inventories	$	1,028		$	588
Accrued expenses		521			644
Stock based compensation		4,121			2,258
Tax loss carryforwards		3,901			3,910
Other		593			580
Valuation allowance		(246	)		(119	)
Total long-term deferred tax assets		9,918			7,861
Deferred tax liabilities:
Depreciation and amortization		(1,149	)		(4,453	)
Total long-term deferred tax liabilities	$	(1,149	)	$	(4,453	)
Net deferred tax assets	$	8,769		$	3,408

Pursuant to ASC 740, we must consider all positive and negative evidence regarding the realization of deferred tax assets. ASC 740 provides for four possible sources of taxable income to realize deferred tax assets: 1) taxable income in prior carryback years, 2) reversals of existing deferred tax liabilities, 3) tax planning strategies and 4) projected future taxable income. As of September 30, 2018, we have no available taxable income in prior carryback years, limited reversals of existing deferred tax liabilities or prudent and feasible tax planning strategies. Therefore, the recoverability of our deferred tax assets is dependent upon generating future taxable income.

Since the fourth quarter of fiscal 2008, the Company had maintained a full valuation allowance against its deferred tax assets, having determined it was more likely than not that the deferred tax assets would not be realized. The determination of releasing valuation allowances against deferred tax assets is made, in part, pursuant to our assessment as to whether it is more likely than not that we will generate sufficient future taxable income against which benefits of the deferred tax assets may or may not be realized. Significant judgment is required in making estimates regarding our ability to generate income in future periods.

In the fourth quarter of fiscal 2016, we reached the conclusion that it was appropriate to release the majority of our valuation allowance against our state net operating loss deferred tax assets due to our operating performance in fiscal 2016 being greater than projected at fiscal 2015 year end. We considered forecasts of future operating results and the utilization of net operating losses within the statutory mandated carryforward periods and determined it was more likely than not that the majority of our state net operating loss deferred tax assets would be realized. As a result of the release of a portion of our deferred tax asset valuation allowance, we recorded approximately $1.1 million reduction in our income tax provision. A portion of the valuation allowance was retained based on particular jurisdictions. Specifically, states with a shorter statutory carryforward periods and states where our economic presence, as defined by the jurisdiction’s tax laws, has been reduced.

As of September 30, 2017, we no longer had federal net operating loss (NOL) carryforwards for federal income tax purposes. As of September 30, 2018, the Company has state NOL carryforwards of approximately $83.5 million for state income tax purposes, which resulted in a deferred tax asset of $3.9 million, and expire at various dates from 2029 through 2032.

Significant judgment is also required in evaluating our uncertain tax positions. Although we believe our tax return positions are sustainable, we recognize tax benefits from uncertain tax positions in the financial statements only when it is more likely than not that the positions will not be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority's administrative practices and precedents. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties.

In fiscal 2017, the Company released a reserve for an uncertain tax position based on administrative practice in the applicable jurisdiction in the amount of $264,000 of which approximately $177,000 impacted the effective tax rate. As of September 30, 2017 and 2018, we had approximately $0 of gross unrecognized tax benefits.

The reconciliation of the total amount recorded for unrecognized tax benefits at the beginning and end of the fiscal years ended September 30, 2017 and 2018 is as follows:

	2017			2018
	(Amounts in thousands)
Unrecognized tax benefits at the beginning of the year	$	254		$	-
Increases in tax positions for prior years		10			-
Decreases in tax positions for prior years		(264	)		-
Unrecognized tax benefits at the end of the year	$	-		$	-

Consistent with our prior practices, we recognize interest and penalties related to uncertain tax positions as a component of income tax expense. As of September 30, 2017 and 2018, interest and penalties represented approximately $0 of the gross unrecognized tax benefits.

We are subject to tax by both federal and state taxing authorities. Until the respective statutes of limitations expire, we are subject to income tax audits in the jurisdictions in which we operate. We are no longer subject to U.S. Federal tax assessments for fiscal years prior to 2014, and we are not subject to assessments prior to the 2013 fiscal year for the majority of the State jurisdictions.