INCOME TAXES

The Tax Cuts and Jobs Act of 2017 ("2017 Tax Act") was signed into law on December 22, 2017. The 2017 Tax Act significantly revised the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 35% to 21%, eliminating certain deductions, imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries, introducing new tax regimes, and changing how foreign earnings are subject to U.S. tax. The 2017 Tax Act also enhanced and extended through 2026 the option to claim accelerated depreciation deductions on qualified property. We have completed our determination of the accounting implications of the 2017 Tax Act on our tax accruals.

The significant components of our income tax (benefit) expense attributable to current operations for the periods stated were as follows:



	For the Year Ended December 31,
(Dollars in thousands)	2018			2017			2016
(Loss) income before income tax (benefit) expense	$	(2,185	)	$	11,559		$	22,971
Current:
Federal tax	$	—		$	199		$	669
State tax	838			1,006			1,294
Foreign tax	148			270			103
Total current	986			1,475			2,066
Deferred:
Federal tax	(1,467		)	26,348			6,811
State tax	(532		)	(787		)	41
Foreign tax	307			(171		)	74
Total deferred	(1,692		)	25,390			6,926
Total income tax (benefit) expense	$	(706	)	$	26,865		$	8,992

Foreign income before income tax (expense) benefit is immaterial to consolidated income before income tax benefit (expense).

The following table summarizes the principal elements of the difference between the United States Federal statutory rate of 21% and our effective tax rate:



Effective tax rate reconciliation	2018					2017							2016
(Dollars in thousands)
(Loss) income before income tax (benefit) expense	$	(2,185	)			$	11,559						$	22,971
Income taxes computed at the Federal statutory rate	$	(459	)	21.0	%	$	4,046		35.0	%			$	8,040	35.0	%
State income taxes, net of Federal benefit	306			(14.0	)%	472			4.1	%			867		3.8	%
Impact of 2017 Tax Act	—			—	%	24,235			209.7	%			—		—	%
Research and development and other tax credits	(1,144		)	52.4	%	(1,775		)	(15.4	)%			—		—	%
Excess executive compensation	281			(12.9	)%	—			—	%			—		—	%
Other	310			(14.2	)%	(113		)	(1.0	)%			85		0.4	%
Income tax (benefit) expense	$	(706	)	32.3	%	$	26,865		232.4	%	1,787.3	%	$	8,992	39.1	%

The anticipated effective income tax rate is expected to continue to differ from the Federal statutory rate primarily due to the effect of state income taxes, the benefit of the research and development tax credit, permanent differences between book and taxable income and certain discrete items. The earnings of non-US subsidiaries are deemed to be indefinitely reinvested in non-US operations.

The components of deferred income tax assets at December 31, 2018 and 2017 were as follows:



	December 31,
(Dollars in thousands)	2018			2017
Net operating losses and tax credits	$	22,003		$	26,296
Property and equipment	5,969			8,289
AMT minimum tax receivable	1,348			2,489
Accruals and accrued loss contingencies	5,776			4,833
Capitalized research and development costs	14,220			9,108
Gross deferred income tax assets	49,316			51,015
Deferred income tax liabilities:
Intangible assets	(2,711		)	(3,075		)
Prepaid and other expenses	(121		)	(261		)
Gross deferred income tax liabilities	(2,832		)	(3,336		)
Net deferred income tax assets	$	46,484		$	47,679

Net Operating Losses

As of December 31, 2018, we had approximately $83.9 million of NOLs available to offset future taxable income. The Federal NOLs begin expiring in 2026 and will fully expire in 2029. We have an immaterial amount of foreign NOLs and tax credits available for future use.

Valuation Allowance

We assess the recoverability of our deferred income tax assets, which represent the tax benefits of future tax deductions, NOLs and tax credits, by considering the adequacy of future taxable income from all sources, including prudent and feasible tax planning strategies. This assessment is required to determine whether based on all available evidence, it is “more likely than not” (which means a probability of greater than 50%) that all or some portion of the DTAs will be realized in future periods. As of December 31, 2018 and 2017, we believe it is more likely than not that our DTAs will be realized in future periods and thus did not have a valuation allowance.

Income Tax Audits

Our Federal income tax returns have been examined by the Internal Revenue Service ("IRS") through December 31, 2008. The audits of the Federal returns for the years ended 2005 through 2008 resulted in no changes. The IRS also audited Amcom’s 2009 Federal tax return (pre-acquisition) with no changes. The 2016, 2017 and 2018 income tax returns of the Company have not been audited by the IRS and are within the statute of limitations (“SOL”).

We operate in all states and the District of Columbia and are subject to various state income and franchise tax audits. The states’ SOL varies from three to four years from the later of the due date of the return or the date filed. We usually file our Federal and all state and local income tax returns on or before September 15 of the following year; therefore, the SOL for those states with a three-year SOL is open for calendar years ending 2015 through 2018, and for the four-year SOL states, the SOL is open for years ending from 2014 through 2018.