NOTE 14—INCOME TAXES

The components of income before income taxes for the years ended December 31, 2019 and 2018 consists of the following:


	Years Ended December 31,
	2019		2018
Domestic	$	1,206	$	(6,998)
Foreign		5,933		13,110
Total income before income taxes	$	7,139	$	6,112

The components of the 2019 and 2018 income tax provision are as follows:


	Years Ended December 31,
	2019		2018
Current:
Federal	$	(327)	$	(3,378)
State		603		575
Foreign		2,431		3,681
Total current provision		2,707		878
Deferred:
Federal		(123)		(268)
State		(140)		(237)
Foreign		1,354		62
Total deferred benefit		1,091		(443)
Total	$	3,798	$	435

The differences between the effective tax rates reflected in the total provision for income taxes and the U.S. federal statutory rate of 21% for both years ended December 31, 2019 and 2018 were as follows:


	Years Ended December 31,
	2019			2018
Tax provision computed at 21%	$	1,499		$	1,284
Nondeductible expenses		521			372
State income taxes, net of federal benefit		327			239
Tax impact of foreign operations		1,347			1,941
Valuation allowances increase (release)		(141)			(2,238)
Net increase (decrease) of uncertain tax positions (1)		(34)			(2,818)
Tax law change impact on transition tax		—			1,642
Other		279			13
Income tax provision	$	3,798		$	435
Effective income tax rates		53.2	%		7.1	%

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During the years ended December 31, 2018, the Company reversed an unrealized tax liability of $0.9 million established at the time of the acquisition of Alsbridge. An associated tax indemnity receivable was also reversed and recorded in selling, general and administrative expense.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted. The company completed its evaluation of the impact of the new law in the fourth quarter of 2018 and recognized an additional deferred tax liability and tax expense of $1.6 million associated with repatriation of unremitted foreign earnings as required under the new tax law (“transition tax”). The company recorded this amount consistent with its indefinite reinvestment assertion.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows:


	December 31,
	2019		2018
Noncurrent deferred tax asset
Compensation related expenses	$	2,279	$	2,441
Foreign currency translation		2,458		2,491
U.S. foreign tax credit carryovers		879		811
Foreign net operating loss carryovers		5,563		5,482
Accruals and reserves		1,404		814
Operating lease right-of-use assets		2,034		—
Other		224		442
Valuation allowance for deferred tax assets		(3,989)		(4,209)
Total noncurrent deferred tax asset		10,852		8,272
Noncurrent deferred tax liability
Depreciable assets		(510)		(486)
Prepaids		(514)		(426)
Intangible assets		(1,177)		(1,436)
Investment in foreign subsidiaries		(3,323)		(2,975)
Foreign earnings distribution taxes		(1,741)		(1,439)
Foreign intangibles and reserves		(1,754)		(356)
Operating lease liabilities		(1,716)		—
Total noncurrent deferred tax liability		(10,735)		(7,118)
Net noncurrent deferred tax asset		117		1,154
Net deferred tax asset	$	117	$	1,154

A valuation allowance was established at December 31, 2019 and 2018 due to estimates of future utilization of net operating loss carryovers in the U.S. and certain foreign jurisdictions, derived primarily from acquisitions and recorded through purchase accounting. The valuation allowance at December 31, 2019 and 2018 also includes a full valuation for the Company’s foreign tax credit carryovers and foreign taxes on its controlled foreign corporation.

Uncertain tax positions

Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more likely than not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. It is the Company’s policy to accrue for interest and penalties related to its uncertain tax positions within income tax expense.

A tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period is as follows:


	December 31,
	2019		2018
Balance, beginning of year	$	1,475	$	4,050
Additions as a result of tax positions taken during the current period		90		145
Reductions as a result of tax positions taken during the current period		—		(1,295)
Additions as a result of tax positions taken during a prior period		—		—
Reductions as a result of lapse of statute		(31)		(1,425)
Balance, end of year	$	1,534	$	1,475

We do not expect our unrecognized tax benefits to significantly change in the next twelve months.

The Company has recognized through income tax expense approximately $0.8 million of interest and penalties related to uncertain tax positions. The amount of unrecognized tax benefit, if recognized, that would impact the effective tax rate is $1.5 million. With few exceptions, the Company is no longer subject to U.S. federal, state, local, or non U.S. income tax examinations by tax authorities for years before 2012.