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Income Taxes
12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The components of the Company’s loss before income tax provision for the years ended December 31, 2018, 2017 and 2016 are as follows:
 
 
Years Ended December 31,
 
 
2018
 
2017
 
2016
Loss from continuing operations before income taxes:
 
 
 
 
 
 
Domestic
 
$
(9,034
)
 
$
(18,147
)
 
$
(17,365
)
Foreign
 
(206
)
 
(1,900
)
 
(6,321
)
Total loss from continuing operations before income taxes
 
$
(9,240
)
 
$
(20,047
)
 
$
(23,686
)

The Company’s income tax provision, which is comprised of minimum U.S. federal, state and local taxes and taxes from foreign jurisdictions, consists of the following:
 
 
Years Ended December 31,
 
 
2018
 
2017
 
2016
Provision for current income taxes:
 
 
 
 
 
 
U.S. federal
 
$
10

 
$

 
$

U.S. state and local
 
91

 
(2
)
 
22

Foreign
 
97

 
154

 
234

Total provision for current income taxes
 
198

 
152

 
256

Benefit for deferred income taxes:
 
 
 
 
 
 
U.S. federal
 
(10
)
 
(332
)
 

U.S. state and local
 

 

 

Foreign
 
(198
)
 
(167
)
 
(92
)
Total benefit for deferred income taxes
 
(208
)
 
(499
)
 
(92
)
Total (benefit) provision for income taxes
 
$
(10
)
 
$
(347
)
 
$
164


A reconciliation between the U.S. federal statutory income tax rate to the effective tax rate, by applying such rates to loss before income tax provision, for the years ended December 31, 2018, 2017 and 2016 are as follows:
 
 
Years Ended December 31,
 
 
2018
 
2017
 
2016
U.S. federal statutory income tax rate
 
(21.00
)%
 
(34.00
)%
 
(34.00
)%
State income tax rate, net of U.S. federal tax benefit
 
0.77

 
(0.01
)
 
0.06

Stock-based compensation expense
 
(6.45
)
 

 
1.23

Acquisition related costs
 

 
3.11

 
5.08

Mark-to-market expense
 

 
0.25

 
1.80

Change in income tax rates
 
(6.33
)
 
(1.03
)
 
2.89

Change in deferred tax asset valuation
 
34.08

 
29.03

 
22.52

Trademark income
 
(1.54
)
 

 

Goodwill impairment charge
 

 
1.46

 

AMT credit
 

 
(1.65
)
 

Meals and Entertainment
 
0.55

 
1.10

 

Other
 
(0.20
)
 
0.01

 
1.11

Effective tax rate
 
(0.12
)%
 
(1.73
)%
 
0.69
 %


Significant components of the Company’s deferred tax assets and liabilities reported on a net cross jurisdictional basis are summarized as follows:
 
 
December 31,
 
 
2018
 
2017
2016
Deferred tax assets:
 
 
 
 
 
Net operating losses and tax credits
 
$
29,322

 
$
27,474

$
46,336

Stock-based compensation expense
 
4,118

 
2,440

3,883

Deferred rent
 
1,049

 
881

1,483

Depreciation and amortization expense
 
1,585

 
672

61

Accrued expenses
 
583

 
316

192

Intangible assets
 

 
294


Deferred revenue
 

 
166

2

Allowance for doubtful accounts
 
283

 
89

1

Unrealized gains and losses
 
51

 
88

94

Total deferred tax assets before valuation allowance
 
36,991

 
32,420

52,052

Less: valuation allowance
 
(36,692
)
 
(32,028
)
(50,211
)
Total deferred tax assets, net of valuation allowance
 
299

 
392

1,841

 
 
 
 
 
 
Deferred tax liabilities:
 
 
 
 
 
Intangible assets
 
(1,243
)
 
(392
)
(2,277
)
Unrealized gains and losses
 
(16
)
 


Other
 

 
(6
)
(11
)
Total deferred tax liabilities
 
(1,259
)
 
(398
)
(2,288
)
 
 
 
 
 
 
Total deferred tax liabilities, net
 
$
(960
)
 
$
(6
)
$
(447
)

For financial and tax reporting purposes, the Company incurred net operating losses in each period since its inception, except for 2017 and, therefore, a significant portion of the deferred tax assets recognized relate to such net operating losses.  In determining whether the Company may realize the benefits from these deferred tax assets, the Company considers all available objective and subjective evidence, both positive and negative. Based on the weight of such evidence, a valuation allowance on a jurisdiction by jurisdiction basis is necessary for some portion, or all, of the deferred tax assets since the Company cannot be assured that, more likely than not, such amounts will be realized. Based on the available objective and subjective evidence, including the Company’s history of net operating losses, management believes it is more likely than not that the deferred tax assets will not be fully realizable at December 31, 2018 and 2017. Accordingly, the Company provided a valuation allowance on substantially all of its deferred tax asset balance to reflect the uncertainty regarding the realizability of these assets for the periods presented, with the exception of a deferred tax asset related to AMT credits.
On December 22, 2017, the U.S. President signed the Tax Cuts and Jobs Act (the “Act”) into law. Effective January 1, 2018, among other changes, the Act (1) reduces the U.S. federal corporate tax rate from 35 percent to 21 percent, (2) changes the rules relating to net operating loss ("NOL") carryforwards and carrybacks, (3) eliminates the corporate alternative minimum tax ("AMT") and changes how existing AMT credits can be realized; and (4) numerous modifications creating a territorial tax system and broadening the income tax base. The impact on the Company's financial statements for the period ended December 31, 2018 is immaterial, primarily because the Company has a valuation allowance on deferred tax assets in the U.S. In addition, the Act makes the AMT credit refundable in tax years beginning after 2017. As a result of this change, the Company does not have a valuation allowance on its AMT credit.
Given the significance of the legislation, the staff of the U.S. Securities and Exchange Commission (the SEC) issued Staff Accounting Bulletin No. 118 (SAB 118), which allowed registrants to record provisional amounts during a one year measurement period similar to that used when accounting for business combinations. The Company applied the guidance in SAB 118 when accounting for the enactment-date effects of the Act in 2017 and throughout 2018.
For the year ended December 31, 2017, amounts recorded principally related to the reduction in the U.S. corporate income tax rate to 21%, which resulted in the Company reducing its net deferred tax asset and associated valuation allowance. Additionally, the new law included a one-time mandatory repatriation transition tax on the net accumulated earnings and profits of a U.S. taxpayer’s foreign subsidiaries. As a result of accumulated losses since inception, there was no income tax effect. At December 31, 2018, the Company completed its accounting of SAB 118 for all of the enactment-date income tax effects of the Act. The Company has not made any measurement-period adjustments and there were no additional material adjustments related to the Act.

As a result of the adoption of ASU 2016-09, the Company no longer excludes tax benefits that arose directly from equity compensation in excess of compensation recognized for financial reporting in its U.S. federal and U.S. state net operating loss carryforwards.
For the year ended December 31, 2018, the Company’s valuation allowance has increased to $36,692 compared to $32,028 as of December 31, 2017, largely due to the increase in deferred tax assets for net operating losses and stock based compensation for which the Company does not believe it will be able to utilize in future periods.
As of December 31, 2018, the Company has U.S. federal and state net operating loss carry-forwards of approximately $109,111 and $63,125, respectively, and foreign net operating loss carry-forwards of $6,764, $6,787, $18, $213, $89 related to its international subsidiaries in the United Kingdom, Germany, Brazil, Australia, and Canada respectively, which are available to reduce future taxable income in those jurisdictions. The U.S. federal net operating losses will expire in various years beginning in 2028 through 2037. The Company’s foreign net operating loss carry-forwards can be carried forward without limitation in each respective country.  The U.S. federal net operating losses includes acquired tax loss carry-forwards of Transpera, Inc. (“Transpera”) and ScanScout, Inc. (“ScanScout”), and net operating losses from Telaria, Inc. ("Telaria") which experienced an ownership change in 2010 which are subject to limitation on future utilization under Section 382 of the Internal Revenue Code of 1986 (“Section 382”). Section 382 imposes limitations on the availability of a company’s net operating losses after a more than 50 percentage point ownership change occurs. It is estimated that the effect of Section 382 will generally limit the amount of the net operating loss carry-forwards of Transpera, ScanScout and Telaria that are available to offset future taxable income to approximately $161, $2,060 and $7,550, respectively, annually.
Telaria’s U.S. federal and U.S. state net operating loss carryforwards include approximately $9,234 of excess tax benefits related to tax deductions from stock-based compensation. As a result of the adoption of ASU 2016-09, the Company no longer excludes tax benefits that arose directly from equity compensation in excess of compensation recognized for financial reporting in its U.S. federal and U.S. state net operating loss carryforwards.
The Company did not record any amounts related to uncertain tax positions or tax contingencies at December 31, 2018 and 2017.  As of December 31, 2018 and 2017, the primary tax jurisdictions in which the Company is subject to tax were the U.S. federal and state jurisdictions, Australia, Canada, Singapore, Malaysia, New Zealand, Brazil, France and United Kingdom. Since the Company is in an overall net operating loss position, the Company is generally subject to U.S. federal and state income tax examinations by tax authorities for all years for which a net operating loss carry-forward is available. The Company’s open tax years extend back to 2005. In the event that the Company concludes that it is subject to interest or penalties arising from uncertain tax positions, the Company will record interest and penalties as a component of provision for income taxes. no amounts of interest or penalties were recognized in the consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016.