9. INCOME TAXES

The provision (benefit) for income taxes consists of the following:

	For the Years Ended December 31,
	2017			2016		2015
Current tax provision (benefit)
Federal	$	—		$	—	$	—
State	848			1,132		7,877

Total current provision (benefit)	848			1,132		7,877


Deferred tax provision (benefit)
Federal	(188,456		)	—		—
State	—			—		—

Total deferred tax provision (benefit)	(188,456		)	—		—

Total income tax provision (benefit)	$	(187,608	)	$	1,132	$	7,877

The Company has $24.9 million in tax benefits attributable to net operating losses for federal tax purposes. The loss carry forwards will begin to expire in 2028 for federal tax purposes and will begin to expire for state tax purposes in 2021. The Company also has credits for alternative minimum taxes (“AMT”) paid of $202 thousand. The alternative minimum tax was repealed with the enactment of the Act. AMT credits carried over may be used to offset regular tax liability for any tax year. Any unused credits are 50% refundable for tax years 2018-2020, and 100% refundable for tax years beginning 2021. The Company has recorded the AMT credit as a tax receivable on its financial statements rather than as a deferred tax asset, as this amount is a refundable credit.

Deferred taxes are provided for those items reported in different periods for income tax and financial reporting purposes. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

	December 31,
	2017			2016
Deferred tax assets
Net operating loss carry forwards	$	6,127,210		$	7,651,971
Credit for alternative minimum tax paid	—			201,773
Accrued expenses and reserves	509,666			1,348,032
Employee stock option expense	76,150			117,613
Nonemployee stock option expense	8,268			12,770
Inventory	224,353			361,437
Impairment	112,000			172,983

Deferred tax assets	7,057,647			9,866,579

Deferred tax liabilities
Property and equipment	(1,231,693		)	(669,246		)

Deferred tax liabilities	(1,231,693		)	(669,246		)

Net deferred assets	5,825,954			9,197,333
Valuation allowance	(5,825,954		)	(9,197,333		)

Net deferred tax assets	$	—		$	—

The Company has made a reasonable estimate of the effects of the Act on its existing deferred tax balances. The Company adjusted its deferred tax valuation account to offset the expected decrease in its deferred tax assets as a result of the change. The Company will adjust its calculations as additional facts and circumstances are known.

Utilization of the net operating loss carry forwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions.

Deferred income tax calculations reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss carry forwards, and are stated at the U.S. tax rate of 21% beginning in 2018. Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. The Company has fully reserved these future tax deductions.

The valuation allowance decreased $3,371,379 for 2017. The valuation allowance increased $1,445,361 for 2016.

A reconciliation of income taxes based on the federal statutory rate and the effective income tax rate is summarized as follows:

	December 31,
	2017		2016		2015
Income tax at the federal statutory rate	35.0	%	35.0	%	35.0	%
State tax, net of federal tax	2.9		2.9		2.9
Change in valuation allowance	85.9		(39.1	)	(37.8	)
Permanent differences	5.7		4.7		0.7
Return-to-provision and other	(37.6	)	(3.5	)	(0.6	)
Tax Reform and Jobs Act tax rate change	(81.1	)	—		—
Incentive stock options	(6.0	)	—		—

Effective tax rate	4.8	%	0.0	%	0.2	%

The Company files income tax returns in the U.S. federal jurisdiction and in various state and local jurisdictions. The Company’s federal income tax returns for all tax years ended on or after December 31, 2014, remain subject to examination by the Internal Revenue Service. The Company’s state and local income tax returns are subject to examination by the respective state and local authorities over various statutes of limitations, most ranging from three to five years from the date of filing.