Income Taxes

Our financial statements include a total income tax (benefit) expense of $(3.5) million, $0.0 million and $0.0 million on income (loss) from operations, before income taxes of $20.1 million, $24.6 million and $(14.9) million for the years ended December 31, 2019, 2018 and 2017, respectively. The components of the income tax provision (benefit) are as follows:



	2019			2018		2017
Current tax expense (benefit)	$	6,726		$	—	$	—
Deferred tax expense (benefit)	(10,239		)	—		—
Total income tax provision (benefit)	$	(3,513	)	$	—	$	—

Substantially all of our current and deferred tax expense was driven by our U.S. Federal tax expense as compared to our state and foreign tax expense.

A reconciliation of the difference between the provision for income taxes and income taxes at the statutory U.S. federal income tax rate is as follows for the years ended December 31:



	2019		2018		2017
Federal statutory rate	21.0	%	21.0	%	34.0	%
Effect of:
Foreign operations	(9.9	)%	—	%	—	%
Share based and officers' compensation	1.3	%	—	%	—	%
State income taxes, net of federal tax benefit	6.5	%	—	%	—	%
Change in valuation allowance	(15.7	)%	(21.4	)%	(36.5	)%
Research and development and other tax credits	(20.7	)%	0.4	%	2.5	%
Income tax provision effective rate	(17.5	)%	—	%	—	%

The significant components of our deferred tax asset were as follows as of December 31 (in thousands):



	2019			2018
Deferred tax assets relating to:
Net operating loss carryforwards	$	7,439		$	4,104
Loan loss reserve	35,452			33,691
Deferred compensation	6,967			5,839
Imputed interest income	532			415
Leases	1,389			1,207
Unrealized loss	345			545
Miscellaneous items	1,345			613
Total gross deferred tax assets	53,469			46,414
Deferred tax liabilities:
Property, equipment and software	3,011			3,151
Origination costs	5,848			5,685
Total gross deferred tax liabilities	8,859			8,836
Net deferred tax asset	44,610			37,578
Less: valuation allowance	(34,373		)	(37,578		)
Net deferred tax asset less valuation allowance	$	10,237		$	—

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and planned tax strategies in making this assessment. After considering these factors, we have concluded that it is more likely than not that we will realize a portion of the benefit of these deductible differences in the future. In 2019, we released $7.5 million of our valuation allowance which was recorded as benefit to our provision for (benefit from) income taxes on our Consolidated Statement of Operations and Comprehensive Income.

Deductions that are not deemed more likely than not to withstand examination by a taxing authority are considered to be "uncertain tax positions" as defined in ASC 740 Income Taxes. We previously claimed deductions on our U.S. federal tax return for certain expenses related to our initial public offering that were validated at the level of substantial authority, but did not exceed the "more likely than not" threshold. We estimated the tax-effected exposure of these deductions to be approximately $2.2 million. These deductions did not result in any change to our prior year tax payable or our provision for income taxes as they only increased our deferred tax asset as well as the corresponding valuation allowance. In 2019, the U.S. Internal Revenue Service notified us that they agreed with our position and allowed the deduction. At December 31, 2019, we did not maintain any material uncertain tax positions.

Our net operating loss carryforwards for U.S. federal and state income tax purposes for 2019 were not or are not expected to be material. Our net operating loss carryforwards for federal income tax purposes were approximately $3.7 million and $69.6 million at December 31, 2018 and 2017, respectively, and if not utilized, will expire at various dates beginning in 2027. State post-apportioned net operating loss carryforwards were $14.9 million and $36.7 million at December 31, 2018 and 2017, respectively. Net operating loss carryforwards and tax credit carryforwards reflected above may be limited due to historical and future ownership changes.

We are no longer subject to U.S. federal, certain state and local income tax examinations for years prior to 2016, with certain states no longer subject for years prior to 2014, although carryforward attributes that were generated prior to 2014 may still be adjusted upon examination by the Internal Revenue Service if used in a future period.