Income Taxes

Income tax benefit included in the consolidated statements of operations consisted of the following (in thousands):



	Year Ended December 31,
	2019			2018
Current:
Federal	$	—		$	—
State	(32		)	104
Foreign	—			(485		)
Total current income tax (benefit) expense	(32		)	(381		)
Deferred:
Federal	(112		)	—
State	—			(22		)
Foreign	—			—
Total deferred income tax (benefit) expense	(112		)	(22		)
Total income tax (benefit) expense	$	(144	)	$	(403	)

The differences between income taxes expected at the U.S. federal statutory income tax rate of 21% and the reported income tax benefit are summarized as follows (in thousands):



	Year Ended December 31,
	2019			2018
Income tax benefit at statutory rate	$	(14,394	)	$	(6,932	)
Nondeductible expenses	2,181			258
Change in deferred tax valuation allowance	20,989			(1,636		)
Change in uncertain tax position	(8,282		)	8,270
Foreign taxes	—			(472		)
State taxes	(467		)	46
Other	(171		)	63
	$	(144	)	$	(403	)

Significant components of our deferred tax assets and liabilities are as follows (in thousands):



	December 31,
	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	22,610		$	6,993
Foreign tax credits	796			796
Acquisition expenses	491			855
Share-based compensation	418			141
Bad debts	965			252
Accrued expenses	1,546			2,529
Tax over book depreciation	4,195			7,019
Intangible assets	3,835			—
Operating lease liabilities	1,331			—
Disallowed interest expense	3,855			—
Other	171			102
Total deferred tax assets	40,213			18,687
Less: valuation allowance	(38,721		)	(17,732		)
Total deferred tax assets, net	$	1,492		$	955
Deferred tax liabilities:
Book over tax depreciation	$	(356	)	$	(137	)
Intangible assets	—			(1,175		)
Operating lease right of use assets	$	(1,381	)	$	—
Total deferred tax liabilities	$	(1,737	)	$	(1,312	)
Net deferred tax liability	$	(245	)	$	(357	)

As of December 31, 2019, the Company had net operating loss (“NOL”) carryforwards for federal income tax purposes of approximately $106.6 million, of which $52.0 million will begin to expire in 2033 if not utilized to offset taxable income, and $54.6 million may be carried forward indefinitely. Future changes in ownership, as defined by Section 382 of the IRC, could limit the amount of NOL carryforwards used in any one year.

In general, under Sections 382 and 383 of the IRC, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and certain tax credits, to offset future taxable income and tax. Generally, an ownership change occurs if the aggregate stock ownership of certain stockholders changes by more than 50 percentage points over such stockholders’ lowest percentage of ownership during the testing period (generally three years). In connection with our emergence from Chapter 11 proceedings in 2017, we experienced an ownership change for the purposes of Section 382. The ownership change did not result in the expiration of any pre-change NOLs. However, any subsequent ownership changes under the provisions of Section 382 could further adversely affect the use of our NOLs in future periods.

At December 31, 2019 and 2018, the Company placed a valuation allowance of $38.7 million and $17.7 million, respectively, against the entirety of its net deferred tax asset balance, as the Company has not determined that it is more likely than not to be realized. The change in the valuation allowance was $21.0 million for the year ended December 31, 2019.

During the year ended December 31, 2018, the Company derecognized $39.4 million of NOLs as an uncertain tax position (representing $8.3 million of deferred tax asset). The uncertain tax position resulted from an administrative error when our 2017 federal income tax return was filed, which inadvertently omitted an election out of the provisions of Section 382(l)(5). The Company filed for 9100 relief, requesting an extension of time to file the missing election. While the Company believed we had a strong set of facts, the decision to grant relief was at the discretion of the IRS. Based on this, we could not conclude “more likely than not” and the deferred tax asset was derecognized as of December 31, 2018. On September 12, 2019 the IRS granted the request and an amended 2017 federal income tax return was filed in accordance with the granted relief. As a result, the Company reinstated $39.4 million of NOL carryforwards, representing a deferred tax asset of $8.3 million at December 31, 2019.

The Company files U.S. federal, U.S. state, and foreign tax returns, and is generally no longer subject to tax examinations for fiscal years prior to 2015.