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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Taxes |
INCOME TAXES | 12. Income Taxes The Company’s components of loss before income tax (in thousands) are as follows:
|  | Year Ended December 31, |
|  | 2019 |  | 2018 |  | 2017 |
Domestic |  | $ | (14,097) |  | $ | (20,577) |  | $ | (32,238) |
Foreign |  |  | (1,355) |  |  | (4,628) |  |  | (4,866) |
Loss before income tax |  | $ | (15,452) |  | $ | (25,205) |  | $ | (37,104) |
The Company’s components of income tax benefit (in thousands) are as follows:
|  | Year Ended December 31, |
|  | 2019 |  | 2018 |  | 2017 |
Current federal benefit |  | $ | 285 |  | $ | 55 |  | $ | 40 |
Current state (expense) benefit |  |  | (69) |  |  | (14) |  |  | 3,545 |
Current foreign benefit |  |  | — |  |  | — |  |  | 2,492 |
Deferred federal expense |  |  | (251) |  |  | (274) |  |  | (51) |
Deferred state benefit |  |  | 127 |  |  | 344 |  |  | 697 |
Deferred foreign benefit (expense) |  |  | 147 |  |  | 687 |  |  | (1,409) |
Income tax benefit |  | $ | 239 |  | $ | 798 |  | $ | 5,314 |
The 2017 Tax Cuts and Jobs Act was enacted on December 22, 2017 resulting in significant changes to the Internal Revenue Code. This reform changed the U.S. Statutory tax rate from 35% to 21% for tax years beginning after December 31, 2017. The Company was required to recognize the effect of the tax law changes in the period of enactment, such as remeasuring the domestic deferred tax assets and liabilities as well as reassessing the net realizability of deferred tax assets and liabilities. Due to the Company’s current loss position and valuation allowances, the tax reform did not have a material impact on its consolidated financial statements. In December 2017, the SEC staff issued Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allows companies to record provisional amounts during a measurement period not to extend beyond one year from the enactment date. The Tax Cuts and Jobs act was enacted in late fourth quarter of 2017 and provisional amounts were recorded. Subsequent guidance was received throughout the year and the accounting of deferred tax remeasurement was completed in accordance with SAB 118. Adjustments did not have a material impact on the Company’s consolidated financial statements due to the domestic loss position and the associated valuation allowances on the domestic deferred tax assets. The income tax provision (in thousands) differs from the amount computed by applying the statutory federal income tax rate to loss before income tax as follows:
|  | Year Ended December 31, |
|  | 2019 |  | 2018 |  | 2017 |
Tax benefit computed at statutory rate of 21% and 35% (1) |  | $ | 3,245 |  | $ | 5,293 |  | $ | 12,986 |
Change in valuation allowance |  |  | (5,744) |  |  | (5,811) |  |  | (4,747) |
State income tax benefit, net of federal tax |  |  | 46 |  |  | 260 |  |  | 2,757 |
Foreign loss |  |  | 2,827 |  |  | 1,319 |  |  | 1,593 |
Tax reform impact to deferred tax balances (2) |  |  | — |  |  | — |  |  | (7,590) |
Other |  |  | (135) |  |  | (263) |  |  | 315 |
Income tax benefit |  | $ | 239 |  | $ | 798 |  | $ | 5,314 |
| (1) |  | Statutory rate of 21% for years ended December 31, 2019 and 2018 and 35% for year ended December 31, 2017.
| (2) |  | Due to the Tax Cuts and Jobs Act enacted on December 22, 2017, the Company’s domestic deferred tax assets and liabilities were remeasured from 35% to 21% as of December 31, 2017. The change in tax rate resulted in a decrease to the gross domestic deferred tax asset which is offset by a corresponding decrease to the valuation allowance.
The principal components of the Company’s net deferred tax assets (liabilities) (in thousands) are as follows:
|  | December 31, |
|  | 2019 |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |
Federal tax net operating loss ("NOL") carryforward |  | $ | 25,921 |  | $ | 24,848 |
Foreign tax NOL carryforward |  |  | 6,418 |  |  | 5,298 |
State tax NOL carryforward |  |  | 1,692 |  |  | 2,134 |
Other comprehensive income |  |  | 379 |  |  | 490 |
Deferred revenue |  |  | 351 |  |  | 697 |
Restricted stock and restricted stock unit awards |  |  | 316 |  |  | 320 |
Foreign deferred taxes |  |  | 242 |  |  | 466 |
Right-of-use assets |  |  | 193 |  |  | — |
Canadian start-up costs |  |  | 122 |  |  | 137 |
Self-insurance |  |  | 106 |  |  | 111 |
Workers’ compensation |  |  | 96 |  |  | 60 |
Alternative Minimum Tax ("AMT") credit carryforward |  |  | 79 |  |  | 315 |
Other |  |  | 90 |  |  | 92 |
Gross deferred tax assets |  |  | 36,005 |  |  | 34,968 |
Less valuation allowances |  |  | (28,299) |  |  | (22,806) |
Net deferred tax assets |  |  | 7,706 |  |  | 12,162 |
Deferred tax liabilities: |  |  |  |  |  |  |
Property and equipment |  |  | (7,649) |  |  | (12,003) |
Net deferred tax assets (liabilities) |  | $ | 57 |  | $ | 159 |
Domestic deferred tax assets |  | $ | 57 |  | $ | 293 |
Foreign deferred tax liabilities |  |  | — |  |  | (134) |
Net deferred tax assets (liabilities) |  | $ | 57 |  | $ | 159 |
At December 31, 2019, the Company had a NOL for U.S. federal income tax purposes of approximately $123,434,000. This NOL will begin to expire in 2027. Losses incurred after the year ended December 31, 2017 have no expiration. The Company will carry forward the tax benefits related to federal NOL of approximately $25,921,000. The Company also had state NOL’s that will affect state taxes of approximately $1,692,000 at December 31, 2019. State NOL’s began to expire in 2015. The Company also had a Canadian NOL of $24,683,000 that will begin to expire in 2037. In evaluating the possible sources of taxable income during 2019, the Company determined it is more likely than not that the remaining deferred tax assets will not be realizable. As a result, the Company recorded full valuation allowance against foreign deferred tax assets and its federal and state deferred tax assets with the exception of its trademark intangible and the remaining AMT credit which will be refundable within the next three years. At December 31, 2019 and 2018, the Company did not have any uncertain tax positions. The Company’s policy is to recognize interest and penalties related to uncertain tax position in income tax expense.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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