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INCOME TAXES | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | (7) INCOME TAXES The pre-tax income from continuing operations on which the provision for income taxes was computed is as follows (in thousands):
|  | 2018 |  |  | 2017 |
United States |  | $ | 10,237 |  |  | $ | 7,511 |
Foreign |  |  | (21 | ) |  |  | (17 | )
Total |  |  | 10,216 |  |  |  | 7,494 |
Income tax expense consists of the following for the years ended December 31, 2018 and 2017 (in thousands):
|  | 2018 |  |  | 2017 |
Current tax expense: |  |  |  |  |  |  |  |
Federal |  | $ | 1,080 |  |  | $ | 119 |
State |  |  | 309 |  |  |  | 10 |
Total tax expense: |  |  | 1,389 |  |  |  | 129 |
Deferred tax (benefit): |  |  |  |  |  |  |  |
Federal |  |  | (462 | ) |  |  | — |
State |  |  | (263 | ) |  |  | — |
Total Deferred tax (benefit): |  | $ | (725 | ) |  | $ | — |
Total |  | $ | 664 |  |  | $ | 129 |
A reconciliation of income tax computed at the U.S. statutory rate of 21% to the effective income tax rate is as follows:
|  | 2018 |  |  | 2017 |
Statutory rate |  |  | 21 | % |  |  | 34 | %
State taxes |  |  | 4 |  |  |  | 3 |
Permanent differences and other |  |  | 1 |  |  |  | 0 |
Change in valuation allowance |  |  | (16 | ) |  |  | (54 | )
Stock based compensation |  |  | (3 | ) |  |  | — |
Other (true – up) |  |  | 0 |  |  |  | 7 |
Rate Adjustment |  |  | 0 |  |  |  | 12 |
Effective rate |  |  | 7 | % |  |  | 2 | %
The tax effects of temporary differences that give rise to deferred tax assets (liabilities) at December 31, 2018 and 2017 are as follows (in thousands):
|  | 2018 |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued expenses |  | $ | 37 |  |  | $ | 25 |
Deferred Revenue |  |  | 217 |  |  |  | 217 |
Accounts receivable |  |  | 18 |  |  |  | 19 |
Inventory |  |  | 117 |  |  |  | 92 |
Stock based compensation |  |  | 138 |  |  |  | 137 |
Tax Credits and NOL Carryforward |  |  | 354 |  |  |  | 1,141 |
Other |  |  | 150 |  |  |  | 6 |
Property and equipment |  |  | - |  |  |  | 35 |
Amortization |  |  | 57 |  |  |  | 64 |
|  |  | 1,088 |  |  |  | 1,736 |
Less: Valuation allowance |  |  | (172 | ) |  |  | (1,727 | )
Deferred tax assets |  | $ | 916 |  |  | $ | 9 |
Deferred tax Liabilities: |  |  |  |  |  |  |  |
Property and equipment |  | $ | (176 | ) |  | $ | - |
Prepaid Expenses |  |  | (15 | ) |  |  | (9 | )
Deferred tax liabilities |  | $ | (191 | ) |  | $ | (9 | )
Net Deferred tax assets |  | $ | 725 |  |  | $ | - |
For federal tax purposes, the Company completely utilized its remaining $2.7 million in NOL carryforwards as of December 31, 2018. The Company has state NOL carryforwards of approximately $ 4.9 million for state purposes, which expire at various dates ranging from five to seven years. The Company has $0.2 million in federal R&D tax credits that will expire by the year 2021 . As of December 31, 2017, the Company had a valuation allowance of approximately $1.8 million. The ultimate realization of deferred tax assets is dependent upon the portion of the asset for which it is more likely than not that a benefit will be realized. Management considers past history, the scheduled reversal of deferred tax liabilities, available taxes in carryback periods, projected future taxable income projections and tax planning strategies in making this assessment. During 2018, Management determined that a valuation allowance was no longer necessary and released the entire amount except those related to the release of certain tax credits totaling $0.2 million. The accounting standard related to income taxes applies to all tax positions and defines the confidence level that a tax position must meet in order to be recognized in the financial statements. The accounting standard requires that the tax effects of a position be recognized only if it is "more-likely-than-not" to be sustained by the taxing authority as of the reporting date. If a tax position is not considered "more-likely-than-not" to be sustained, then no benefits of the position are to be recognized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits. This standard also provides guidance on the presentation of tax matters and the recognition of potential IRS interest and penalties. As of December 31, 2018 and 2017, the Company does not have an unrecognized tax liability. The Company does not classify penalty and interest expense related to income tax liabilities as an income tax expense. The Company files income tax returns in the U.S. and various state jurisdictions, and there are open statutes of limitations for taxing authorities to audit our tax returns from 2011 through the current period.

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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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