Income Taxes

12 Months Ended

Dec. 31, 2018

(6)	Income Taxes

The components of loss before income taxes and dividends on preferred stock for the years ended December 31, 2018 and 2017 were as follows:

	December 31,
	2018			2017
	(in thousands)
United States	$	(2,990	)	$	(3,556	)
Foreign		1,620		404
Discontinued operations		(896	)		(2,031	)
	$	(2,266	)	$	(5,183	)

The components of the provision (benefit) for income taxes by taxing authority for the years ended December 31, 2018 and 2017 were as follows:

	December 31,
	2018		2017
	(in thousands)
Current provision:
Federal	$	-	$	-
State		-		-
Foreign		291		78
Total current provision	$	291	$	78

Deferred benefit:
Federal	$	-	$	(3,033	)
State		-		-
Foreign		-		-
Total deferred benefit		-		(3,033	)
	$	291	$	(2,955	)

The Company files income tax returns in the United States Federal jurisdiction and various state jurisdictions. The Company is subject to examination by federal and state tax authorities for fiscal years 2014 through 2018.

Significant components of the Company’s deferred federal income taxes at December 31, 2018 and 2017 were as follows:

	December 31,
	2018			2017
	(in thousands)
Deferred tax assets:
Accrued liabilities	$	11		$	136
Deferred compensation		642			520
Allowance for doubtful accounts		-			71
Inventory		-			73
Net operating loss		3,430			2,783
Property and equipment		-			71
Equity in foreign earnings		-			-
Deferred tax assets		4,083			3,654

Valuation allowance		(4,083	)		(3,654	)
Net deferred tax assets	$	-		$	-

The Company’s deferred tax assets are primarily related to net operating loss carry forwards. A valuation allowance was established at December 31, 2018 and 2017 due to uncertainty regarding future realization of deferred tax assets. Our total valuation allowance as of December 31, 2018 and 2017 is $4.1 million and $3.65 million, respectively.

The difference between the effective income tax rate reflected in the provision for income taxes and the amounts, which would be determined by applying the statutory income tax rate of 21% and 34% at December 31, 2018 and 2017, respectively, is summarized as follows:

	December 31,
	2018			2017
	(in thousands)
Benefit from U. S. federal statutory rate	$	287		$	1,071
Effect of discontinued operations		188			691
Change in valuation allowance		(429	)		4,734
Accrual to return adjustments and other		-			235
Foreign income taxes included in equity earnings		(113	)		496
Foreign income taxes		(178	)		-
Non-deductible business meals and entertainment expenses		(46	)		(45	)
Effect of state income taxes		-			32
Change in enacted tax rate		-			(4,259	)
	$	(291	)	$	2,955