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INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2016
Income Tax Disclosure [Abstract] |
INCOME TAXES | Financial files a consolidated federal income tax return with its subsidiaries. Income tax (benefit) expense consists of the following:
|  | Year Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Federal income tax (benefit) expense: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | — |  |  | $ | (228,000 | ) |  | $ | (22,000 | )
Deferred |  |  | — |  |  |  | — |  |  |  |  |
|  |  | — |  |  |  | (228,000 | ) |  |  | (22,000 | )
State and local: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | — |  |  |  | (47,000 | ) |  |  | (5,000 | )
Deferred |  |  | — |  |  |  | — |  |  |  | — |
|  |  | — |  |  |  | (47,000 | ) |  |  | (5,000 | )
Total: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | — |  |  |  | (275,000 | ) |  |  | (27,000 | )
Deferred |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | — |  |  | $ | (275,000 | ) |  | $ | (27,000 | )
Income tax benefit in 2015 and 2014 represent the utilization of the loss from continuing operations against income from discontinued operations, exclusive in 2015 of the capital loss from disposal of the investment in the former affiliate. Reconciliation between the income tax (benefit) provision and income taxes computed by applying the statutory Federal income tax rate to loss before income taxes is as follows:
|  | Year Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Expected income tax (benefit) at statutory Federal tax rate (34%) |  | $ | (1,897,000 | ) |  | $ | (1,051,000 | ) |  | $ | (2,251,000 | )
State and local taxes, net of Federal tax effect |  |  | (400,000 | ) |  |  | (68,000 | ) |  |  | (464,000 | )
Increase in valuation allowance |  |  | 1,704,000 | (1) |  |  | 784,000 |  |  |  | 2,551,000 |
Nondeductible transaction costs related to change in control |  |  | 482,000 |  |  |  |  |  |  |  |  |
Expiration of contribution carryforward |  |  | 85,000 |  |  |  |  |  |  |  |  |
Permanent difference |  |  | 19,000 |  |  |  | 13,000 |  |  |  | 39,000 |
Other |  |  | 7,000 |  |  |  | 47,000 |  |  |  | 98,000 |
Income tax (benefit) |  | $ | — |  |  | $ | (275,000 | ) |  | $ | (27,000 | )
(1) | Reflects a $264,000 reduction to the valuation allowance and related deferred tax assets as of December 31, 2015.
The principal items giving rise to deferred tax assets (liabilities) are as follows:
|  | December 31, |
|  | 2016 |  |  | 2015 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss credit carryforwards |  | $ | 10,316,000 |  |  | $ | 9,456,000 |
Capital loss carryforwards |  |  |  |  |  |  | 395,000 |
|  |  |  |  |  |  | — |
Employee stock based compensation |  |  | 237,000 |  |  |  | 237,000 |
Retail brokerage accounts (b) |  |  | 71,000 |  |  |  | 140,000 |
Contribution carryover |  |  | 158,000 |  |  |  | 178,000 |
Furniture, equipment and leasehold improvements |  |  | 312,000 |  |  |  | 181,000 |
Accrued settlement liability |  |  | 340,000 |  |  |  | 252,000 |
Investment in former affiliate (a) |  |  | — |  |  |  | — |
Other |  |  | 8,000 |  |  |  | 44,000 |
Total |  |  | 11,442,000, |  |  |  | 10,883,000 |
Valuation allowance |  |  | (11,442,000 | ) |  |  | (10,002,000 | )
Net deferred tax assets |  |  | — |  |  |  | 881,000 |
Deferred tax liability: |  |  |  |  |  |  |  |
Receivable from affiliate (a) |  |  | — |  |  |  | (881,000 | )
|  |  | — |  |  |  | — |
| (a) | Relates to receivable from business sold to affiliate treated as an installment sale for tax purposes.
| (b) | Related to acquired retail discount brokerage accounts, which are being amortized over 15 years for tax purposes and have been fully amortized for financial reporting purposes.
Due to cumulative losses incurred by the Company during the current and prior two years, the Company is unable to conclude that it is more likely than not that it will realize its deferred tax asset in excess of the deferred tax liability and, accordingly, has recorded a valuation allowance to fully offset such amount at December 31, 2016 and 2015. At December 31, 2016, the Company has state net operating loss carryforwards aggregating $17.4 million, which expires from 2029 through 2036. In addition, the Company has federal net operating loss carryforwards of $24.2 million at December 31, 2016, which expires from 2030 through 2036. Utilization of the Company’s net operating loss carryforwards are subject to annual limitations under Internal Revenue Code section 382 due to the change in ownership. The Company applied the “more-likely-than not” recognition threshold to all tax positions taken or expected to be taken in a tax return which resulted in no unrecognized tax benefits reflected in the financial statements as of December 31, 2016. The Company classifies interest and penalties that would accrue according to the provisions of relevant tax law as income taxes. Tax years 2013 and thereafter are subject to examination by federal and certain tax authorities. For other states the 2010 through 2013 tax years remain open to examination. The Company is currently under tax examination by New York State for the years 2012 to 2014 and by the state of Illinois for the years 2012 and 2013.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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