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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income tax expense (benefit) are as follows:
|  | Year Ended December 31,
In thousands |  | 2018 |  | 2017
Current |  |  |  |  |  |
Federal |  | $ | (18,194 | ) |  | $ | 348 |
State and local |  | 314 |  |  | 245 |
Foreign |  | 1,413 |  |  | 472 |
Total current |  | $ | (16,467 | ) |  | $ | 1,065 |
Deferred |  |  |  |  |  |
Federal |  | $ | (470 | ) |  | $ | (9,886 | )
State and local |  | (181 | ) |  | (747 | )
Foreign |  | (994 | ) |  | (326 | )
Total deferred |  | $ | (1,645 | ) |  | $ | (10,959 | )
Total income tax benefit |  | $ | (18,112 | ) |  | $ | (9,894 | )
The U.S. and foreign components of income (loss) before income taxes were as follows:
|  | Year Ended December 31,
In thousands |  | 2018 |  | 2017
United States |  | $ | (4,873 | ) |  | $ | (49,731 | )
Foreign |  | 4,311 |  |  | (2,023 | )
Total loss from operations before income taxes |  | $ | (562 | ) |  | $ | (51,754 | )
The differences between total income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate of 21% for 2018 and 35% for 2017 to income (loss) before income taxes were as follows:
|  | Year Ended December 31,
In thousands |  | 2018 |  | 2017
Computed expected income tax benefit |  | $ | (118 | ) |  | $ | (18,114 | )
Goodwill impairment basis difference |  | — |  |  | 6,000 |
Basis difference on sale of 3Q Digital |  | (11,937 | ) |  | — |
Net effect of state income taxes |  | (388 | ) |  | (559 | )
Foreign subsidiary dividend inclusions |  | 2,781 |  |  | 440 |
Foreign tax rate differential |  | 189 |  |  | 187 |
Change in valuation allowance due to tax reform |  | — |  |  | (13,821 | )
Change in valuation allowance |  | 3,383 |  |  | 2,265 |
Non-deductible interest |  | — |  |  | 1,280 |
Loss from deemed liquidation of foreign subsidiary |  | (4,242 | ) |  | — |
Rate Benefit from Carryback of Capital Loss |  | (6,452 | ) |  | — |
Stock-based compensation shortfalls |  | 437 |  |  | 1,373 |
Change in U.S. tax rate due to tax reform |  | — |  |  | 10,391 |
Return to Provision |  | (1,835 | ) |  | — |
Other, net |  | 70 |  |  | 664 |
Income tax benefit for the period |  | $ | (18,112 | ) |  | $ | (9,894 | )
Total income tax benefit was allocated as follows:
|  | Year Ended December 31,
In thousands |  | 2018 |  | 2017
Operations |  | $ | (18,112 | ) |  | $ | (9,894 | )
Stockholders’ equity |  | — |  |  | 755 |
Total |  | $ | (18,112 | ) |  | $ | (9,139 | )
The U.S. Tax Cuts and Jobs Act (the "Tax Reform Act”) was enacted on December 22, 2017. The legislation significantly changed U.S. tax law by, among other things, lowering the corporate income tax rate from 35% to 21%, implementing a territorial tax system and imposing a one-time repatriation tax on deemed repatriated earnings of foreign subsidiaries. The main impact of the Tax Reform Act on our financial statement is related to the re-measurement of deferred tax balances. We recognized the tax effects of the Tax Reform Act in the year ended December 31, 2017 and recorded a deferred tax benefit of $3.4 million due to the re-measurement of deferred tax balances to the new 21% corporate tax rate. We applied the guidance in the SAB 118 when accounting for the enactment-date effects of the Tax Reform Act in 2017 and throughout 2018. At December 31, 2018, we have now completed our accounting for all the enactment-date income tax effects of the Tax Reform Act. We did no t record any adjustments to our provisional amounts in the year ended December 31, 2018. The Tax Reform Act subjects a U.S. shareholder to tax on Global Intangible Low Tax Income (GILTI) earned by certain foreign subsidiaries. The FASB Staff Q&A Topic 740, No. 5 "Accounting for Global Intangible Low-Taxed Income," states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. We have elected to account for GILTI as a current period expense when incurred. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
|  | Year Ended December 31,
In thousands |  | 2018 |  | 2017
Deferred tax assets |  |  |  |
Deferred compensation and retirement plan |  | $ | 16,179 |  |  | $ | 15,017 |
Accrued expenses not deductible until paid |  | 1,584 |  |  | 1,619 |
Employee stock-based compensation |  | 780 |  |  | 1,757 |
Accrued payroll not deductible until paid |  | 428 |  |  | 1,111 |
Accounts receivable, net |  | 100 |  |  | 179 |
Investment in Foreign Subsidiaries, Outside Basis Difference |  | 1,322 |  |  | — |
Goodwill |  | 710 |  |  | 700 |
Other, net |  | 142 |  |  | 290 |
Foreign net operating loss carryforwards |  | 3,042 |  |  | 2,887 |
State net operating loss carryforwards |  | 3,776 |  |  | 3,978 |
Foreign tax credit carryforwards |  | 3,653 |  |  | 3,653 |
Federal net operating loss carryforwards |  | 2,507 |  |  | — |
Total gross deferred tax assets |  | 34,223 |  |  | 31,191 |
Less valuation allowances |  | (31,170 | ) |  | (28,350 | )
Net deferred tax assets |  | $ | 3,053 |  |  | $ | 2,841 |
Deferred tax liabilities |  |  |  |  |  |
Property, plant and equipment |  | $ | (1,689 | ) |  | $ | (1,941 | )
Goodwill and other intangibles |  | — |  |  | (701 | )
Prepaid Expenses |  | (331 | ) |  | — |
Other, net |  | (281 | ) |  | (972 | )
Total gross deferred tax liabilities |  | (2,301 | ) |  | (3,614 | )
Net deferred tax assets (liabilities) |  | $ | 752 |  |  | $ | (773 | )
A reconciliation of the beginning and ending balance of deferred tax valuation allowance is as follows:
In thousands |  |
Balance at December 31, 2016 |  | $ | 40,148 |
Deferred Income Tax Expense |  | (1,227 | )
Return to Provision Impact |  | 3,250 |
Impact of Tax Reform Act |  | (13,821 | )
Balance at December 31, 2017 |  | $ | 28,350 |
Deferred Income Tax Expense |  | 3,383 |
Return to Provision Impact |  | (854 | )
Other comprehensive income |  | 291 |
Balance at December 31, 2018 |  | $ | 31,170 |
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowance for deferred tax assets was $31.2 million and $28.4 million at December 31, 2018 and 2017, respectively. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form of cumulative losses is no longer present, and additional weight may be given to subjective evidence such as changes in our growth projections. We or one of our subsidiaries file income tax returns in the U.S. federal, U.S. state, and foreign jurisdictions. For U.S. state returns, we are no longer subject to tax examinations for years prior to 2013. For U.S. federal and foreign returns, we are no longer subject to tax examinations for years prior to 2015. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
In thousands |  |
Balance at December 31, 2016 |  | $ | 967 |
Settlements |  | (761 | )
Balance at December 31, 2017 |  | $ | 206 |
Settlements |  | (206 | )
Balance at December 31, 2018 |  | $ | — |
There is no balance of unrecognized tax benefits as of December 31, 2018. Any adjustments to this liability as a result of the finalization of audits or potential settlements would not be material. We have elected to classify any interest and penalties related to income taxes within income tax expense in our Consolidated Statements of Comprehensive Income (Loss). We did not recognize any tax benefits for the reduction of accrued interest and penalties associated with the reduction of the liability for unrecognized tax benefits during the years ended December 31, 2018 and 2017. We did not have any interest and penalties accrued at December 31, 2018 or 2017. As of December 31, 2018, we had federal net operating loss carryforwards that are allowed to be carried forward indefinitely and available to reduce 80% of future taxable income in any given year. Deferred income taxes have not been provided on the undistributed earnings of our foreign subsidiaries as these earnings have been, and under current plans will continue to be, permanently reinvested in these subsidiaries. It is not practicable to estimate the amount of additional taxes which may be payable upon the distribution of these earnings. However, because of the provisions in the Tax Reform Act, the tax cost of repatriation is immaterial and limited to foreign withholding taxes, currency translation and state taxes.

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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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