Income Taxes

The components for income tax expense included in the accompanying consolidated statements of operations for the years ended December 31, 2019 and 2018 are as follows (in thousands):



	December 31, 2019		December 31, 2018
Current state income tax expense	$	38	$	—
Current foreign income tax expense	78		—
Deferred federal income tax expense	—		—
Total income tax expense	$	116	$	—

A reconciliation of income taxes computed using the 21% U.S. federal statutory rate to the amount reflected in the accompanying consolidated statement of operations for the years ended December 31, 2019 and 2018 is as follows (in thousands):



	December 31, 2019			December 31, 2018
Income tax benefit using U.S. federal statutory rate	$	1,397		$	2,328
State income tax expense	(30		)	—
Foreign income tax expense	(78		)	—
Non-deductible expenses	(66		)	(17		)
Change in valuation allowance	(1,306		)	(2,311		)
Other	(33		)	—
	$	(116	)	$	—

The effects of temporary differences and carryforwards that give rise to deferred tax assets (liabilities) are as follows (in thousands):



	December 31, 2019			December 31, 2018
Federal net operating loss carryforward	$	11,468		$	10,876
Accrued interest to related parties, not deductible until paid	449			334
Accrued compensation	101			—
Basis of intangible assets	368			221
Valuation allowance	(5,256		)	(3,950		)
Total deferred tax assets	7,130			7,481

Basis of property, plant and equipment	6,821			7,447
Bad debt expense	—			34
Prepaid expenses	138			—
Basis in foreign entity	171			—
Total deferred tax liabilities	7,130			7,481
Net deferred tax liabilities	$	—		$	—

At December 31, 2019, the Company has net operating loss carry forwards of approximately $53.6 million which may be used to offset future taxable income. The net operating loss carryforwards includes $42.8 million of losses arising prior to December 31, 2017 that expire in 2028 through 2037. Those arising in tax years after 2017 can be carried forward indefinitely. Also, for losses arising in taxable years beginning after December 31, 2017 the operating loss deduction is limited to 80% of taxable income (determined without regard to the deduction). Since the Company has not yet generated significant taxable income, a valuation allowance has been established to fully reserve the Company's net deferred tax assets at December 31, 2019. A change in ownership eliminated substantially all net operating loss carryforwards of an acquired subsidiary at July 26, 2019. The elimination of those loss carryforwards is shown above as a section 382 limitation.

The Company files a consolidated tax return with its subsidiary companies and provides income taxes as if the Company filed a consolidated return. The provision for estimated income taxes is based on elements of income and expense reported in the consolidated statement of income.

As of December 31, 2019, the Company's tax returns for years 2015 to 2018 remain subject to examination for both federal and state filings.