Note 7 - Income Taxes

12 Months Ended

Dec. 31, 2015

7.	INCOME TAXES

The income tax provision from continuing operations consists of the following:

Year ended December 31, (in thousands)	201 5		201 4
Current	$	3	$	18
Total	$	3	$	18

Following is a reconciliation of estimated income taxes at the statutory rate from continuing operations to estimated tax expense (benefit) as reported:

Year ended December 31,	201 5			201 4
Statutory rate		35	%		35	%
Change in valuation allowance		(35	%)		(34	%)
Effective rate		0	%		1	%

Net deferred tax assets consist of the following at December 31:

(in thousands)	201 5			201 4
Deferred tax assets:
Federal, state and foreign loss carryforwards	$	1,850		$	3,862
Capital loss carryforward		--			3,570
Deferred revenue		68			71
Federal and state tax credits		653			520
Other		(79	)		503
Total deferred tax asset		2,492			8,526
Less valuation allowance		(2,492	)		(8,526	)
Net deferred tax asset	$	--		$	--

Federal and state tax credits of $653,000 included in the above table expire at various dates between 2024 and 2035.

We had a deferred tax asset of approximately $2.5 million and $8.5 million at December 31, 2015 and December 31, 2014, respectively. The deferred tax asset has been offset by a valuation allowance in 2015 and 2014 of $2.5 million and $8.5 million, respectively, because the company believes that it is more likely than not that the amount will not be realized. No deferred taxes have been provided on temporary differences related to investments in foreign subsidiaries because these investments are considered to be permanent.

As of December 31, the following net operating loss carryforwards, if unused as offsets to future taxable income, will expire during the following years:

(in thousands)	201 5		201 4
2021	$	689	$	689
2022		849		849
2030		4		4
2031		298		298
Thereafter		3,445		9,196
Total	$	5,285	$	11,036

Of the net operating losses detailed above, $1.5 million are related to net operating losses that CoreCard incurred prior to its acquisition by the company. These net operating losses are subject to Separate Return Limitation Year rules. These net operating loss carryforwards will begin to expire in years 2021 through 2022.

We have recognized tax benefits from all tax positions we have taken, and there has been no adjustment to any carry forwards (net operating loss or research and development credits) in the past two years. There were no unrecognized tax benefits as of December 31, 2015 and 2014. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were no accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the periods presented. We have determined we have no uncertain tax positions.

We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership equals or exceeds 80%, as well as individual subsidiary returns in various states and foreign jurisdictions.