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INCOME TAXES | 12 Months Ended
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Dec. 31, 2019
INCOME TAXES |
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):
|  | 2019 |  | 2018
United States |  | $ | 11,964 |  | $ | 10,237
Foreign |  |  | (23) |  |  | (21)
Total |  |  | 11,941 |  |  | 10,216
Income tax expense consists of the following for the years ended December 31, 2019 and 2018 (in thousands):
|  | 2019 |  | 2018
Current tax expense: |  |  |  |  |  |
Federal |  | $ | 1,865 |  | $ | 1,080
State |  |  | 372 |  |  | 309
Total tax expense: |  |  | 2,237 |  |  | 1,389
Deferred tax expense/(benefit): |  |  |  |  |  |
Federal |  |  | 120 |  |  | (462)
State |  |  | 92 |  |  | (263)
Total deferred tax expense/(benefit): |  | $ | 212 |  | $ | (725)
Total |  | $ | 2,449 |  | $ | 664
A reconciliation of income tax computed at the U.S. statutory rate of 21% to the effective income tax rate is as follows:
|  | 2019 |  | 2018 |
Statutory rate |  | 21 | % | 21 | %
State taxes |  | 3 |  | 4 |
Permanent differences and other |  | — |  | 1 |
Change in valuation allowance |  | (1) |  | (16) |
Stock based compensation |  | (4) |  | (3) |
Other (true – up) |  | 1 |  | — |
Effective rate |  | 20 | % | 7 | %
The tax effects of temporary differences that give rise to deferred tax assets (liabilities) at December 31, 2019 and 2018 are as follows (in thousands):
|  | 2019 |  | 2018
Deferred tax assets: |  |  |  |  |  |
Accrued expenses |  | $ | 34 |  | $ | 37
Lease liability |  |  | 1,109 |  |  | 217
Accounts receivable |  |  | 19 |  |  | 18
Inventory |  |  | 232 |  |  | 117
Stock-based compensation |  |  | 145 |  |  | 138
Tax Credits and NOL Carryforward |  |  | 110 |  |  | 354
Other |  |  | 1 |  |  | 150
Property and equipment |  |  | — |  |  | —
Amortization |  |  | 50 |  |  | 57
|  |  | 1,700 |  |  | 1,088
Less: Valuation allowance |  |  | — |  |  | (172)
Deferred tax assets |  | $ | 1,700 |  | $ | 916
Deferred tax liabilities: |  |  |  |  |  |
Property and equipment |  | $ | (192) |  | $ | (176)
Finance lease |  |  | (45) |  |  | —
Right-of-use asset |  |  | (946) |  |  | —
Prepaid expenses |  |  | (4) |  |  | (15)
Deferred tax liabilities |  | $ | (1,187) |  | $ | (191)
Net deferred tax assets |  | $ | 513 |  | $ | 725
For federal tax purposes, the Company completely utilized its remaining $2.7 million in NOL carryforwards as of December 31, 2018. As of December 31, 2019, the Company has NOL carryforwards in various states, which expire at various dates ranging from five to seven years. As of December 31, 2019 the Company had no recorded valuation allowance. As of December 31, 2018 the Company had a valuation allowance of $0.2 million. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. 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 2019, Management determined that no valuation is necessary and released the remaining valuation allowance. 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, 2019 and 2018, 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. Penalties and interest are included within general and administrative expenses on the consolidated statements of operations. 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 2014 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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