Loss before income taxes for domestic and non-U.S. operations is as follows (in thousands):

	2019			2018
Loss from operations before income taxes and noncontrolling interest:
U.S. (a)	$	(1,960	)	$	(6,330	)
Foreign (a)		1,135			1,782
Loss from operations before income taxes and noncontrolling interest	$	(825	)	$	(4,548	)

(a)

U.S. and Foreign loss from operations before income taxes and noncontrolling interest for 2019 is adjusted for intercompany capital losses associated with the dissolution of foreign subsidiaries.

	December 31,
	2019			2018
Deferred:
Federal	$	—		$	—
State		—			—
Foreign		—			—
	$	—		$	—
Current:
Federal	$	1		$	23
State		(30	)		(26	)
Foreign		(297	)		(152	)
Total current		(326	)		(155	)
Total provision for income taxes	$	(326	)	$	(155	)

Significant items making up deferred tax assets and liabilities are as follows (in thousands):

	December 31,
	2019			2018
Deferred tax assets:
Allowances not currently deductible for tax purposes	$	433		$	902
Net operating loss carryforwards		48,860			57,548
Operating lease liabilities		1,135			—
General carryforwards		13,366			2,886
Stock options		1,229			1,176
Accrued and other		1,900			1,568
		66,923			64,080
Less valuation allowance		(62,492	)		(60,824	)
		4,431			3,256
Deferred tax liability:
Depreciation and amortization		(1,556	)		(1,945	)
Operating lease right-of-use assets		(1,086	)		—
State income taxes		(1,789	)		(1,311	)
		(4,431	)		(3,256	)
Net deferred tax liability	$	—		$	—

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2019. Such objective evidence limits the ability to consider other subjective evidence such as the Company’s projections for future growth.

A valuation allowance of $62.5 million and $60.8 million at December 31, 2019 and December 31, 2018, respectively, has been recorded to offset the related net deferred tax assets as the Company is unable to conclude that it is more likely than not that such deferred tax assets will be realized. The net deferred tax liabilities are primarily from foreign tax liabilities as well as intangibles acquired as a result of the acquisition of Hirsch and 3VR, which are not deductible for tax purposes.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Act”). The Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. For businesses, the Act reduces the corporate federal tax rate from a maximum of 35% to a flat 21% rate. The rate reduction took effect on January 1, 2018.

Section 951A under the Act requires a U.S. shareholder of a controlled foreign corporation to include in taxable income the shareholder’s share of global intangible low-taxed income (“GILTI”) for the year. The Company has determined that the Section 951A provisions do apply to its operations and relationships with its controlled foreign corporations “(CFCs”). The Company recorded GILTI income of $0.5 million in 2019. The Company’s GILTI calculation resulted in no GILTI income in 2018 due to net tested losses at its CFCs. As of December 31, 2019, the Company had net operating loss carryforwards of $117.3 million for federal, $42.1 million for state and $72.2 million for foreign income tax purposes. Certain of the Company’s federal, state and foreign loss carryforwards have started expiring and will continue to expire through 2039 if not utilized.

The Tax Reform Act of 1986 (the”Tax Reform Act”) limits the use of net operating loss and tax credit carryforwards in certain situations where changes occur in stock ownership. The Company completed its acquisition of Bluehill ID AG on January 4, 2010, which resulted in a stock ownership change as defined by the Tax Reform Act. The Company also completed its acquisition of 3VR on February 14, 2018, which resulted in a stock ownership change as defined by the Tax Reform Act. These transactions resulted in limitations on the annual utilization of federal and state net operating loss carryforwards and credits. As a result, the Company reevaluated its available deferred tax assets, and the loss carryforward and credit amounts, excluding the valuation allowance presented above have been adjusted for the limitation resulting from the change in ownership in accordance with the provisions of the Tax Reform Act.

The provision for income taxes reconciled to the amount computed by applying the statutory federal tax rate to the loss before income taxes from operations is as follows (in thousands):

	December 31,
	2019			2018
Income tax provision at statutory federal tax rate of 21%	$	173		$	955
State taxes, net of federal benefit		(23	)		(21	)
Foreign taxes provisions provided for at rates other than U.S statutory rate		486			222
Section 951(A) inclusion		(108	)		—
Expiration of capital loss carryforwards		689			—
Change in valuation allowance		(1,668	)		(1,141	)
Permanent differences		135			108
Acquisition costs		(10	)		(115	)
Other		—			(163	)
Total provision for income taxes	$	(326	)	$	(155	)

The Company applies the provisions of, and accounted for uncertain tax positions in accordance with, ASC 740. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

A reconciliation of the beginning and ending amount of unrecognized tax benefits with an impact on the Company’s consolidated balance sheets or results of operations is as follows (in thousands):

	2019			2018
Balance at January 1	$	2,879		$	2,878
Additions based on tax positions related to the current year		2			2
Additions for tax positions of prior years		2			—
Reductions in prior year tax positions		(196	)		(1	)
Balance at December 31	$	2,687		$	2,879

While timing of the resolution and/or finalization of tax audits is uncertain, the Company does not believe that its unrecognized tax benefits as presented in the above table would materially change in the next 12 months.

As of December 31, 2019 and 2018, the Company recognized liabilities for unrecognized tax benefits of $2.7 million and $2.8 million, respectively, which were accounted for as a decrease to deferred tax assets. Since there was a full valuation allowance against these deferred tax assets, there was no impact on the Company’s consolidated balance sheets or results of operations for the years 2019 and 2018. Also the subsequent recognition, if any, of these previously unrecognized tax benefits would not affect the effective tax rate. Such recognition would result in adjustments to other tax accounts, primarily deferred taxes. The amount of unrecognized tax benefits which, if recognized, would affect the tax rate is $0.1 million as of December 31, 2019 and 2018.

The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. During fiscal 2019, the Company recorded a reduction to accrued penalties of $1,000 and an increase in accrued interest of $2,000 related to the unrecognized tax benefits noted above. As of December 31, 2019, the Company has recognized a total liability for penalties of $12,000 and interest of $35,000. During fiscal 2018, the Company recorded an increase in accrued penalties of $1,000 and an increase in accrued interest of $1,000 related to the unrecognized tax benefits noted above. As of December 31, 2018, the Company has recognized a total liability for penalties of $13,000 and interest of $33,000.

The Company files U.S. federal, U.S. state and foreign tax returns. As a result of a federal tax examination for tax year ended December 31, 2015, which was completed in the year ended December 31, 2018, the Company adjusted NOLs within tax years 2015 and 2016. The adjustments had no net impact on its deferred tax assets or income tax provision. The Company generally is no longer subject to tax examinations for years prior to 2015. However, if loss carryforwards of tax years prior to 2015 are utilized in the U.S., these tax years may become subject to investigation by the tax authorities.