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Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 10—INCOME TAXES

 

(a) Composition of loss from continuing operations before income taxes is as follows (in thousands):

 

   

Year ended

December 31,

 
    2020     2019  
Domestic   $ 76     $ (697 )
                 

 

Income tax expense consists of the following (in thousands):

 

   

Year ended

December 31,

  
    2020     2019  
Current:            
Federal   $ 16     $ —  
State and local     5       —   
      21       —   
Deferred:                
Federal     (16 )     —  
State and local     (5 )     —  
      (21 )     —  
Total income tax expense   $ —       $ —  

 

(b) Effective Income Tax Rates

 

Set forth below is a reconciliation between the federal tax rate and the Company’s effective income tax rates with respect to continuing operations:

 

    Year ended December 31,  
    2020     2019  
Statutory Federal rates     21 %     21 %
Increase (decrease) in income tax rate resulting from:                
Other, net (primarily permanent differences)     12       (2 )
Valuation allowance     (33 )     (19 )
Effective income tax rates     — %     (— )%

 

(c) Analysis of Deferred Tax Assets and (Liabilities) (in thousands):

 

    As of December 31,  
    2020     2019  
Deferred tax assets (liabilities) consist of the following:            
Employee benefits and deferred compensation   $ 1,076     $ 1,040  
Investments and asset impairments     1,818       1,818  
Other temporary differences     (1,002 )     (871 )
Net operating loss and capital loss carryforwards     15,739       15,591  
      17,631       17,578  
Valuation allowance     (17,631 )     (17,578 )
Net deferred tax assets   $ —     $ —  

 

Valuation allowances relate principally to net operating loss carryforwards related to the Company’s consolidated tax losses as well as state tax losses related the Company’s OmniMetrix subsidiary and book-tax differences related asset impairments and stock compensation expense of the Company. During the year ended December 31, 2020, the valuation allowance increased by approximately $52,000.

 

(d) Summary of Tax Loss Carryforwards

 

As of December 31, 2020, the Company had various operating loss carryforwards expiring as follows (in thousands):

 

Expiration   Federal     Capital Loss     State  
2023   $ —     $ 556     $ —  
2025 – 2031*     2,579       —       —  
2032 – 2039     63,180       —       14,898  
Unlimited     3,882       —       1,721  
Total   $ 69,641     $ 556     $ 16,619  

 

* The utilization of a portion of these net operating loss carryforwards is limited due to limits on utilizing net operating loss carryforwards under Internal Revenue Service regulations when or if a change of control were to occur

 

(e) Taxation in the United States

 

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces the U.S. 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. The most significant impact of the legislation for the Company was a reduction of the value of the Company’s net deferred tax assets (which represent future tax benefits) as a result of lowering the U.S. corporate income tax rate from 35% to 21%. The Act also includes a requirement to pay a one-time transition tax (the “Transition Tax”) on the cumulative value of earnings and profits that were previously not repatriated for U.S. income tax purposes. The Company does not believe that it will be required to pay any Transition Tax on its previously unrepatriated earnings and profits of its previously consolidated foreign subsidiaries.

 

As a holding company without other business activity in Delaware, the Company is exempt from Delaware state income tax. Thus, the Company’s statutory income tax rate on domestic earnings is the federal rate of 21%.