17.	INCOME TAXES:

The United States and foreign components of Income (loss) from continuing operations before income taxes are as follows (in thousands):

	Year Ended December 31,
	2019		2018		2017

United States	$	32,244	$	16,207	$	(9,634	)
Foreign		396		853		142
Total	$	32,640	$	17,060	$	(9,492	)

The components of Income tax expense (benefit) from continuing operations are as follows (in thousands):

	Year Ended December 31,
	2019			2018			2017

Current:
Federal	$	174		$	(117	)	$	(466	)
State		(16	)		99			49
Foreign		439			395			12
Total current income tax expense (benefit)		597			377			(405	)
Deferred:
Federal		3,597			(2,954	)		(766	)
State		561			(807	)		71
Foreign		(17	)		132			-
Total deferred income tax expense (benefit)		4,141			(3,629	)		(695	)
	$	4,738		$	(3,252	)	$	(1,100	)

December

22,

2017,

the Tax Cuts and Jobs Act of

2017

was signed into law making significant changes to the Internal Revenue Code. Changes include, but are

not

limited to, a federal corporate income tax rate decrease from

35%

21%

effective for tax years beginning after

December

31,

2017,

the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a

one

-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of

December

31,

2017.

In accordance with the TCJA, the Company recorded

$0.9

million as additional income tax expense in the

fourth

quarter of

2017,

the period in which the legislation was enacted. The total expense included

$0.6

million related to the remeasurement of certain deferred income tax assets and liabilities and

$0.2

million related to the transition tax. Additionally, Staff Accounting Bulletin

No.

118

(“SAB

118”

) was issued to address the application of U.S. GAAP in situations when a registrant does

not

have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA.

December

22,

2018

marked the end of the measurement period for purposes of SAB

118.

As such, the Company has completed the analysis based on legislative updates relating to the TCJA currently available, which did

not

result in material changes from the amount recorded in

2017.

The difference between the Company’s effective income tax rate and the federal statutory income tax rate is explained as follows (dollar amounts in thousands):

	Year Ended December 31,
	2019			2018			2017

Income tax expense (benefit) at federal statutory rate	$	6,854		$	3,583		$	(3,322	)
State expense (benefit), net of federal income tax effect		1,261			(218	)		(472	)
Federal and state income tax credits		-			(7	)		36
Change in valuation allowance		(3,564	)		(2,618	)		1,570
Tax windfall on share-based compensation		-			(369	)		-
Excess income tax shortfall on share-based compensation		-			-			765
Bargain purchase gain		-			(4,228	)		-
Effect of Tax Cuts and Jobs Act of 2017		-			-			874
Uncertain income tax positions		-			-			(562	)
Foreign rate differential		36			77			-
Other		151			528			11
Income tax expense (benefit)	$	4,738		$	(3,252	)	$	(1,100	)
Effective income tax rate		14.5	%		(19.1	)%		(11.6	)%

The income tax effect of temporary differences that give rise to significant portions of deferred income tax assets and liabilities is presented below (in thousands):

	December 31,
	2019			2018
Deferred income tax assets:
Contract assets, net	$	-		$	425
Accrued employee benefits		3,089			2,157
Inventories		147			347
Trade receivable, net		788			1,040
Net operating loss carryforwards		5,391			12,867
Tax credit carryforwards		5,173			5,181
Other		509			226
		15,097			22,243
Valuation allowance		(6,126	)		(9,433	)
		8,971			12,810
Deferred income tax liabilities:
Contract assets, net		(1,703	)		-
Property and equipment		(10,578	)		(11,984	)
Intangible assets		(226	)		(310	)
Prepaid expenses		(587	)		(470	)
		(13,094	)		(12,764	)

Net deferred income tax assets (liabilities)	$	(4,123	)	$	46

Amounts are presented in the Consolidated Balance Sheets as follows:
Deferred income tax assets, included in Other assets	$	142		$	114
Deferred income taxes		(4,265	)		(68	)
Net deferred income tax assets (liabilities)	$	(4,123	)	$	46

In assessing the ability to realize deferred income tax assets, management considers whether it is more likely than

not

that some portion or all of the deferred income tax assets will

not

be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, taxable income in carryback periods, and tax planning strategies in making this assessment. Because the Company has a recent history of generating cumulative losses, management did

not

consider projections of future taxable income as persuasive evidence for the recoverability of its deferred income tax assets. The Company believes it is more likely than

not

it will realize the benefits of its deductible differences as of

December

31,

2019,

net of any valuation allowance.

As of

December

31,

2019,

the Company had approximately

$13.2

million of federal net operating loss carryforwards,

$6.7

million of which expire in

2036

and

$6.5

million of which are indefinite lived,

$2.9

million of federal income tax credit carryforwards, which expire on various dates between

2023

and

2038,

and

$0.9

million of capital loss carryforwards, which expire in

2023.

As of

December

31,

2019,

the Company also had approximately

$32.1

million of state net operating loss carryforwards, which expire on various dates between

2020

and

2037,

and state income tax credit carryforwards of

$4.2

million, which begin to expire in

2020.

As of

December

31,

2019,

the Company also had approximately

$3.0

million of foreign net operating loss carryforwards, which expire on various dates between

2023

and

2029.

The Company files income tax returns in the United States Federal jurisdiction, in a limited number of foreign jurisdictions, and in many state jurisdictions. With few exceptions, the Company is

longer subject to United States Federal, state, or foreign income tax examinations for years before

2015.

A summary of the changes in the unrecognized income tax benefits is presented below (in thousands):

	Year Ended December 31,
	2019		2018		2017

Unrecognized income tax benefits, beginning of year	$	4,350	$	4,116	$	4,874
Decreases for lapse in statute of limitations		-		-		(520	)
Decreases for positions taken in prior years		-		-		(238	)
Increases for positions taken in the current year		-		234		-
Unrecognized income tax benefits, end of year	$	4,350	$	4,350	$	4,116

The Company does

not

believe it is reasonably possible that the total amounts of unrecognized income tax benefits will change in the following

twelve

months; however, actual results could differ from those currently expected. Effectively all of the unrecognized income tax benefits would affect the Company’s effective income tax rate if recognized at some point in the future.

The Company recognizes interest and penalties related to uncertain income tax positions in Income tax benefit from continuing operations. As of

December

31,

2019

and

2018,

the Company had

accrued interest related to uncertain income tax positions. Total interest for uncertain income tax positions did

not

change materially in

2019,

2018,

2017.