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INCOME TAXES | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The following table presents the U.S. and foreign components of consolidated income (loss) before income taxes and the provision for (benefit from) income taxes (in thousands):
| Fiscal Years
| 2017 |  |  | 2016 |  |  | 2015 |
Income (loss) before income taxes: |  |  |  |  |
U.S. | $ | (14,253 | ) |  | $ | (19,340 | ) |  | $ | (17,897 | )
Foreign | 209 |  |  | 257 |  |  | 195 |
Income (loss) before income taxes | $ | (14,044 | ) |  | $ | (19,083 | ) |  | $ | (17,702 | )
Provision for (benefit from) income taxes: |  |  |  |  |
Current: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | 37 |
State | 2 |  |  | (3 | ) |  | 2 |
Foreign | 85 |  |  | 75 |  |  | 99 |
Subtotal | 87 |  |  | 72 |  |  | 138 |
Deferred: |  |  |  |  |
Federal | — |  |  | — |  |  | — |
State | — |  |  | — |  |  | — |
Foreign | — |  |  | (7 | ) |  | 8 |
Subtotal | — |  |  | (7 | ) |  | 8 |
Provision for income taxes | $ | 87 |  |  | $ | 65 |  |  | $ | 146 |
Based on the available objective evidence, management believes it is more likely than not that the U.S. net deferred tax assets will not be fully realizable. Accordingly, the Company has provided a full valuation allowance against its U.S. federal and state deferred tax assets at December 31, 2017. Any future release of the valuation allowance may be recorded as a tax benefit increasing net income. The Company believes it is more likely than not it will be able to realize its foreign deferred tax assets. Deferred tax balances are comprised of the following (in thousands):
| December 31, 2017 |  | January 1, 2017
Deferred tax assets: |  |  |
Net operating losses | $ | 37,631 |  |  | $ | 53,924 |
Capital losses | 1,726 |  |  | 2,938 |
Accruals and reserves | 1,487 |  |  | 1,875 |
Credits carryforward | 5,743 |  |  | 5,080 |
Depreciation and amortization | 9,056 |  |  | 14,415 |
Stock-based compensation | 343 |  |  | 968 |
| 55,986 |  |  | 79,200 |
Valuation allowances | (55,931 | ) |  | (79,150 | )
Deferred tax asset | $ | 55 |  |  | $ | 50 |
Deferred tax liability | $ | — |  |  | $ | — |
The following table presents the rate reconciliation between income tax provisions at the U.S. federal statutory rate and the effective rate reflected in the consolidated statements of operations:
| Fiscal Years
| 2017 |  | 2016 |  | 2015
Income tax (benefit) at statutory rate | $ | (4,775 | ) |  | $ | (6,489 | ) |  | $ | (5,962 | )
State taxes | 2 |  |  | (3 | ) |  | 2 |
Stock compensation and other permanent differences | 75 |  |  | 211 |  |  | 286 |
Foreign taxes | (30 | ) |  | (19 | ) |  | 41 |
Benefit allocated from other comprehensive income (loss) | — |  |  | — |  |  | — |
Future benefit of deferred tax assets not recognized | 4,815 |  |  | 6,365 |  |  | 5,779 |
Provision for income taxes | $ | 87 |  |  | $ | 65 |  |  | $ | 146 |
As of December 31, 2017, the Company had net operating loss carryforwards of approximately $161.1 million for federal and $53.9 million for state income tax purposes. If not utilized, these carryforwards will expire beginning 2018 for federal and state purposes. The Company early adopted ASU 2016-09 in Q4 2016 and elected to continue to estimate their forfeiture rate rather than recognizing forfeitures as they occur. The ASU 2016-09 is considered to be effective from the beginning of the year of adoption. In the year of adoption, ASU 2016-09 requires that the cumulative effect adjustment be recorded to retained earnings. Due to the full valuation allowance, there is no cumulative effect adjustment to record. Excess windfall net operating loss carryforwards were converted into deferred tax net operating losses with a corresponding increase in valuation allowance as of the beginning of 2016, the year of adoption. The Company has research credit carryforwards of approximately $4.2 million for federal and $4.2 million for state income tax purposes as of December 31, 2017. If not utilized, the federal carryforwards will expire in various amounts beginning in 2018. The California credit can be carried forward indefinitely. The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. As of December 31, 2017, the Company has not completed the accounting for the tax effects of enactment of the Act; however, in certain cases, as described below, the Company has made a reasonable estimate of the effects on the existing deferred tax balances and the one-time transition tax. For the items for which the Company was able to determine a reasonable estimate, there was no impact on the income tax expense as the impact was on U.S. deferred taxes which are offset by a valuation allowance. In all cases, the Company will continue to make and refine the calculations as additional analysis is completed. In addition, the Company's estimates may also be affected as the Company gains a more thorough understanding of the tax law. Deferred tax assets and liabilities: The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, the Company is still analyzing certain aspects of the Act and refining the calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional decrease to the deferred tax asset balance and corresponding decrease to the valuation allowance was approximately $26.9 million. Foreign tax effects: The one-time transition tax is based on the Company's total post-1986 earnings and profits or E&P that the Company previously deferred from US income taxes. The Company's one-time transition tax does not generate a tax liability as the deemed distribution is offset by current year taxable losses. The Company has not yet completed the calculation of the total post-1986 E&P for these foreign subsidiaries. Under the Tax Reform Act of 1986, the amount of and the benefit from net operating loss carryforwards and credit carryforwards may be impaired or limited in certain circumstances. Events which may restrict utilization of a company's net operating loss and credit carryforwards include, but are not limited to, certain ownership change limitations as defined in Internal Revenue Code Section 382 and similar state provisions. In the event the Company has had a change of ownership, utilization of carryforwards could be restricted to an annual limitation. The annual limitation may result in the expiration of net operating loss carryforwards and credit carryforwards before utilization. The Company has not undertaken a study to determine if its net operating losses are limited. In the event the Company previously experienced an ownership change, or should experience an ownership change in the future, the amount of net operating losses and research and development credit carryovers available in any taxable year could be limited and may expire unutilized. Foreign withholding taxes associated with the repatriation of earnings of foreign subsidiaries were not provided for on a cumulative total of $742,000 of undistributed earnings for certain foreign subsidiaries as of the end of fiscal 2017. The Company intends to reinvest these earnings indefinitely in the Company's foreign subsidiaries. The Company believes that future domestic cash generation will be sufficient to meet future domestic cash needs. The Company has not recorded a deferred tax liability on the undistributed earnings of non-U.S. subsidiaries. The foreign withholding taxes would not have a material impact on the Company’s financial position and results of operation. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| December 31, 2017 |  | January 1, 2017 |  | January 3, 2016
Beginning balance of unrecognized tax benefits | $ | 2,014 |  |  | $ | 696 |  |  | $ | 516 |
Additions for tax positions related to the prior year | 16 |  |  | 1,204 |  |  | (3 | )
Additions for tax positions related to the current year | 77 |  |  | 150 |  |  | 199 |
Lapse of statues of limitations | — |  |  | (36 | ) |  | (16 | )
Ending balance of unrecognized tax benefits | $ | 2,107 |  |  | $ | 2,014 |  |  | $ | 696 |
Out of $2.1 million of unrecognized tax benefits, there are no unrecognized tax benefits that would result in a change in the Company's effective tax rate if recognized in future years. The accrued interest and penalties related to uncertain tax positions was not significant for December 31, 2017, January 1, 2017 and January 3, 2016. The Company is not currently under tax examination and the Company's historical net operating loss and credit carryforwards may be adjusted by the Internal Revenue Service, and other tax authorities until the statute closes on the year in which such tax attributes are utilized. The Company estimates that its unrecognized tax benefits will not change significantly within the next twelve months. The Company is subject to U.S. federal income tax as well as income taxes in many U.S. states and foreign jurisdictions in which the Company operates. The U.S. tax years from 1998 forward remain effectively open to examination due to the carryover of unused net operating losses and tax credits.

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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