NOTE 13 - INCOME TAXES

The components of the Company's income tax (benefit) expense as of December 31 (in thousands):


	2018		2017
Current:
Federal	$	(118)	$	140
State and local		87		173
Total current tax (benefit) expense		(31)		313
Deferred:
Federal	$	1,567	$	1,902
Net deferred tax asset remeasurement		—		1,179
State and local		239		(410)
Total deferred taxes		1,806		2,671
Income tax expense	$	1,775	$	2,984

On December 22, 2017, H.R. 1, originally known as the Tax Cuts and Jobs Act (the "2017 Tax Reform") was enacted. The 2017 Tax Reform significantly revised the U.S. corporate income tax code by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. As a result of the 2017 Tax Reform, the Company recorded a tax expense of $1.2 million due to a remeasurement of deferred tax assets and liabilities.

The following is a reconciliation of income taxes reflected on the statements of income for the years ended December 31 with income tax expense computed by applying the United States federal income tax rate of 21% and 35%, respectively to income before income taxes (in thousands):


	2018		2017

Income tax expense computed at 21% and 35% statutory rate, respectively	$	1,558	$	1,753
Statutory rate change from 35% to 21%		—		1,179
Differences:
Permanent differences		(89)		(114)
State taxes, net of federal expense		258		166
Other, net		48		—
Income tax expense	$	1,775	$	2,984

The following were the principal components of the Company's deferred tax items as of December 31 (in thousands):


	2018		2017
Deferred tax assets:
Net operating loss carryforwards	$	995	$	2,758
Allowance for loan losses		1,921		1,911
Deferred rent		960		957
Stock-based compensation		1,277		1,266
Allowance for losses on other real estate owned		461		469
Other intangible assets		747		946
Unrealized losses on securities		530		405
Other		206		-
Total deferred tax assets		7,097		8,712
Deferred tax liabilities:
Goodwill	$	(1,772)	$	(1,683)
Depreciation		(980)		(998)
Other		(39)		(44)
Total deferred tax liabilities		(2,791)		(2,725)
Net deferred tax asset	$	4,306	$	5,987

The net operating loss ("NOL") carryforwards expire in the years 2028 through 2033. As of December 31, 2018, the Company has $0.8 million and $0.2 million of California and Colorado NOLs available for utilization. In general, a corporation's ability to utilize its NOL carryforwards may be substantially limited due to ownership changes that have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), as well as similar state provisions. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income and tax. In general, an "ownership change," as defined by Section 382 of the Code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percent of the capital (as defined) of a company by certain stockholders or public groups.

The Company identified no material uncertain tax positions for which it is reasonably possible the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months. The Company and its subsidiaries file tax returns for the United States and for multiple states and localities. The United States federal income tax returns of the Company are eligible to be examined for the years 2015 and forward. There are no federal or state tax examinations currently in progress.