INCOME TAXES

The loss from continuing operations before income taxes, non-controlling interest and equity in (earnings) of equity-method investment is as follows (in thousands):



	Year Ended December 31,
	2018			2017			2016
United States	$	(64,237	)	$	(46,648	)	$	(120,553	)
Foreign	2,519			421			(3,829		)
Loss from continuing operations before income taxes, non-controlling interest and equity in (earnings) of equity-method investment	$	(61,718	)	$	(46,227	)	$	(124,382	)

The current and deferred income tax benefit is as follows (in thousands):



	Year Ended December 31,
	2018		2017			2016
Current:
Federal	$	—	$	(730	)	$	(15	)
State	118		123			155
Foreign	277		507			61
	395		(100		)	201
Deferred:
Federal	—		—			—
State	—		—			—
Foreign	262		353			329
	262		353			329
Provision for income taxes	$	657	$	253		$	530

A reconciliation of the effect of applying the federal statutory rate and the effective income tax rate on our income tax benefit is as follows:



	Year Ended December 31,
	2018		2017		2016
Federal income tax at statutory rates	(21.0	)%	(34.0	)%	(34.0	)%
Foreign income tax	(0.1	)	0.5		0.7
State income tax	(5.5	)	(5.0	)	(5.0	)
Other permanent differences	1.3		0.4		0.2
Statutory tax rate change	1.2		—		(3.2	)
Statutory tax rate change - Deferred - Tax Reform Act	—		(128.4	)	—
Statutory tax rate change - Valuation Allowance - Tax Reform Act	—		128.4		—
Compensation	—		—		3.0
Goodwill impairment	—		—		25.2
Refundable AMT credit	—		(1.5	)	—
Change in valuation allowance	25.2		40.1		13.5
Effective tax rate	1.1	%	0.5	%	0.4	%

Temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities that give rise to significant portions of deferred taxes related to the following (in thousands):



	December 31,
	2018			2017
Long-term deferred income tax (liabilities) assets:
Property and equipment	$	50,405		$	43,554
Goodwill	1,071			1,392
Intangible assets	(26,534		)	(22,021		)
Deferred revenue, less current portion	1,358			1,834
Restructuring liability, less current portion	696			1,282
Refinance	(4,130		)	(374		)
Deferred rent	285			639
Stock-based compensation	1,450			911
Provision for doubtful accounts	1,360			1,772
U.S. net operating loss carryforwards	99,026			89,117
Foreign net operating loss carryforwards, less current portion	7,631			8,053
Tax credit carryforwards	2,775			2,812
Interest limitation	9,403			—
Impact of adoption of ASC 606	(6,666		)	—
Other	2,408			2,090
Long-term deferred income tax assets	140,538			131,061
Less: valuation allowance	(142,749		)	(132,712		)
Net long-term deferred income tax (liabilities) assets	(2,211		)	(1,651		)

Net deferred tax liabilities	$	2,211		$	1,651

As of December 31, 2018, we have U.S. net operating loss carryforwards for federal tax purposes of $367.1 million of which, $331.7 million that will expire in tax years 2018 through 2037 and $35.4 million will not expire. Of the total U.S. net operating loss carryforwards, $27.7 million of net operating losses related to the deduction of stock-based compensation. This amount was included in the financial statement balance of U.S net operating loss carryforwards upon the adoption of ASU 2016-09 in 2017 related to employee share-based payments. In addition, research and development tax, foreign tax and state and local tax credits carryforwards of approximately $0.5 million. Research and development credits will begin to expire in 2027. Finally, we have foreign net operating loss carryforwards of approximately $36.7 million that are currently subject to annual expiration.

We determined that through December 31, 2018, no further ownership changes have occurred since 2001 pursuant to Section 382 of the Internal Revenue Code ("Section 382"). Therefore, as of December 31, 2018, no additional material limitations existed on the U.S. net operating losses related to Section 382. However, if we experience subsequent changes in stock ownership as defined by Section 382, we may have additional limitations on the future utilization of our U.S. net operating losses.

On December 22, 2017, the United States enacted tax reform legislation commonly known as the H.R.1 (the "Act") resulting in significant modifications to existing law. The Company follows the guidance in SEC Staff Accounting Bulletin 118 ("SAB 118"), which provides additional clarification regarding the application of ASC Topic 740 in situations where the Company does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act for the reporting period in which the Act was enacted. SAB 118 provides for a measurement period beginning in the reporting period that includes the Act's enactment date and ending when the Company has obtained, prepared, and analyzed the information needed in order to complete the accounting requirements but in no circumstances should the measurement period extend beyond one year from the enactment date.

The Company has completed the accounting for the effects of the Act during the period ended December 31, 2018. There were no material adjustments as of result of the Act to the 2017 amounts recorded in the year end December 31, 2018.

The FASB Staff also provided additional guidance to address the accounting for the taxation of global intangible low-taxed income ("GILTI"). FASB determined that companies should make an accounting policy election to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to include the GILTI tax expense in the year it is incurred. We have completed our analysis of the effects of the GILTI provisions and have elected to expense GILTI tax as incurred.

As a result of the Act, as of December 31, 2017, the Company recorded the impact of the remeasurement of deferred tax assets and liabilities from 35.0% to 21.0%, along with the offsetting adjustment to our valuation allowance including a decrease to the valuation allowance of $0.7 million related to the Alternative Minimum Tax credit carryforwards that are expected to be refundable.

We periodically evaluate the recoverability of the deferred tax assets and the appropriateness of the valuation allowance. As of December 31, 2018, we continued to maintain a valuation allowance of $137.1 million against the U.S. deferred tax asset and $5.6 million against the foreign deferred tax asset that we do not believe are more likely than not to be realized. We will continue to assess the requirement for a valuation allowance on a quarterly basis and, at such time when we determine that it is more likely than not that the deferred tax assets will be realized, we will reduce the valuation allowance accordingly.

Changes in our deferred tax asset valuation allowance are summarized as follows (in thousands):



	Year Ended December 31,
	2018		2017			2016
Balance, January 1,	$	132,712	$	164,865		$	148,310
Increase in deferred tax assets	10,037		27,183			16,555
Remeasurement in deferred tax assets	—		(59,336		)	—
Balance, December 31,	$	142,749	$	132,712		$	164,865

We intend to reinvest future earnings indefinitely within each country. Accordingly, we have not recorded deferred taxes for the difference between our financial and tax basis investment in foreign entities. However, the tax impact of any unremitted foreign earnings that may be available for distribution would likely be immaterial to the financial statements.

Our accounting for uncertainty in income taxes requires us to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, we must measure the tax position to determine the amount to recognize in the financial statements.

Changes in our unrecognized tax benefits are summarized as follows (in thousands):



	Year Ended December 31,
	2018		2017			2016
Unrecognized tax benefits balance, January 1,	$	162	$	187		$	—
Addition for tax positions taken in a prior year	300		162			187
Deduction for tax positions taken in a prior year	—		(187		)	—
Unrecognized tax benefits balance, December 31,	$	462	$	162		$	187

During 2018, we recorded $0.3 million increase to our unrecognized tax benefits.

We classify interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations and comprehensive loss as a component of "Provision (benefit) for income taxes." As of December 31, 2018 and 2017, we had an accrual of $0.2 million and less than $0.1 million, respectively, for interest and penalties related to uncertain tax positions.

Our U.S. federal and state income tax returns remain open to examination for the tax years 2015 through 2017; however, tax authorities have the right to adjust the net operating loss carryovers for years prior to 2017. Returns filed in other jurisdictions are generally subject to examination for years prior to 2017.