Note

13.

Income Taxes

The components of income tax expense (benefit) from continuing operations are (in thousands):

	For the Years Ended December 31,
	2019			2018
Current:
Federal	$	(11	)	$	(113	)
State and local		36			(176	)
Total current	$	25		$	(289	)

Below is a reconciliation of the expected federal income tax expense (benefit) using the federal statutory tax rate of

21%

to the Company’s actual income tax benefit and resulting effective tax rate (in thousands).

	For the Years Ended December 31,
	2019			2018

Income tax expense (benefit) at statutory rate	$	(2,949	)	$	984

State income taxes, net of federal tax benefit		36			36
Valuation allowance		2,528			(688	)
Change in federal tax rate		—			—
Change in state tax rate		—			—
Bankruptcy reorganization		9			17
Uncertain tax positions		—			(371	)
Other		401			(267	)
Total income tax expense (benefit)	$	25		$	(289	)

Prior to

2018

, the Company concluded that it was

longer more likely than

not

that it would realize a portion of its deferred tax assets. As such, the Company maintained a full valuation allowance against its net deferred tax assets as of both

December 31, 2019

and

2018

The Company's determination of the realizable deferred tax assets requires the exercise of significant judgment, based in part on business plans and expectations about future outcomes. In the event the actual results differ from these estimates in future periods, the Company

may

need to adjust the valuation allowance, which could materially impact our financial position and results of operations. The Company will continue to assess the need for a valuation allowance in future periods. As of

December 31, 2019

and

2018

, the Company maintained a valuation allowance of

166.5

million and

164.0

million, respectively, for its deferred tax assets.

Significant components of the Company’s deferred tax assets and liabilities as of

December 31, 2019

and

2018

are (in thousands):

	December 31,
	2019			2018
Deferred tax assets:
Federal NOL carryforwards	$	152,705		$	153,139
State NOL carryforwards		9,003			9,016
Goodwill impairment, HCS		1,084			—
Business interest expense limitation		1,877			—
Other		1,876			1,866
Gross deferred tax asset		166,545			164,021
Valuation allowance		(166,545	)		(163,992	)
Deferred tax asset		—			29
Deferred tax liabilities:
Other		—			29
Deferred tax liability		—			29
Net deferred tax asset	$	—		$	—

The other deferred tax assets consist of differences in various accrued expenses, debt restructuring expenses, goodwill and intangible asset book to tax differences, and various other book to tax differences.

As of

December 31, 2019

, the Company had a federal NOL of approximately

727.2

million, including $

250.3

million in losses on mortgage securities that have

not

been recognized for income tax purposes. The federal NOL

may

be carried forward to offset future taxable income, subject to applicable provisions of the Internal Revenue Code (the "Code"). If

not

used, these NOLs will expire in years

2025

through

2037.

Due to tax reform enacted in

2017,

NOLs created after

2017

carry forward indefinitely;

the portion of NOLs that will

not

expire is $

92.6

million. T

he Company has state NOL carryforwards arising from both combined and separate filings from as early as

2004.

The state NOL carryforwards

may

expire as early as

2018

and as late as

2037.

The activity in the accrued liability for unrecognized tax benefits for the years ended

December 31, 2019

and

2018

was (in thousands):

	For the Years Ended December 31,
	2019			2018
Beginning balance	$	11		$	328
Gross increases – tax positions in current period		—			1
Lapse of statute of limitations		(11	)		(318	)
Ending balance	$	—		$	11

Accounting for income taxes, including uncertain tax positions, represents management's best estimate of various events and transactions, and requires significant judgment. As of

December 31, 2019

, there were

unrecognized tax benefits, and as of

December 31, 2018

, the total gross amount of unrecognized tax benefits was $

0.01

million, which also represents the total amount of unrecognized tax benefits that would impact the effective tax rate. The change in unrecognized tax benefits of $

0.01

million was due the lapse of statute of limitations in

2019.

The Company does

not

expect any other significant change in the liability for unrecognized tax benefits in the next

twelve

months. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. The benefit for interest and penalties recorded in income tax expense was

not

significant for

2019

and

2018

. There were accrued interest and penalties of less than

$0.1

million as of both

December 31, 2019

and

2018

. The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and local jurisdictions. Tax years

2016

2019

remain open to examination for both U.S. federal income tax and major state tax jurisdictions.