8.	INCOME TAXES

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

Year ended December 31, (in thousands)	2017		2016
Current	$	28	$	--
Total	$	28	$	--

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,	2017			2016
Statutory rate		35	%		35	%
Change in valuation allowance		(29	%)		(35	%)
Effective rate		6	%		0	%

Net deferred tax assets consist of the following at

December 31:

(in thousands)	2017			2016
Deferred tax assets:
Federal, state and foreign loss carryforwards	$	794		$	1,440
Deferred revenue		11			30
Federal and state tax credits		757			642
Other		402			823
Total deferred tax asset		1,964			2,935
Less valuation allowance		(1,964	)		(2,935	)
Net deferred tax asset	$	--		$	--

Federal and state tax credits of $

757,000

included in the above table expire at various dates between

2024

and

2035.

December 22, 2017,

the U.S. federal government enacted the Tax Cuts and Jobs Act of

2017,

which, among other provisions, decreases the maximum federal corporate income tax rate from

35%

21%

beginning

January 1, 2018.

ASC

740,

Income Taxes, requires all deferred tax liabilities and assets to be adjusted for the effect of a change in tax rates by including such effect in income from continuing operations in the reporting period that includes the enactment date.

In accordance with this guidance, the Company has included a charge to tax expense to decrease the deferred tax asset for the year ended

December 31, 2017

of approximately

$805,000

related to the decrease in the federal corporate income tax rate for future periods. This charge was offset with a change in the valuation allowance recorded related to deferred taxes. This is a non-cash charge to expense in the current year, and does

not

affect the amount of taxes paid by the Company in the current period.

We had a deferred tax asset of approximately

$2.0

million and

$2.9

million at

December 31, 2017

and

December 31, 2016,

respectively. The deferred tax asset has been offset by a valuation allowance in

2017

and

2016

$2.0

million and

$2.9

million, respectively, because the company believes that it is more likely than

not

that the amount will

not

be realized.

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)	2017		2016
2021	$	689	$	689
2022		849		849
2034		2,245		2,578
Total	$	3,783	$	4,116

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 expire in years

2021

and

2022.

We have recognized tax benefits from all tax positions we have taken, and there has been

adjustment to any carry forwards (net operating loss or research and development credits) in the past

two

years.

There were

unrecognized tax benefits as of

December 31, 2017

and

2016.

Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were

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

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