INCOME TAXES

The provision (benefit) for income taxes on income (loss) from continuing operations consists of the following:



	2018			2017			2016
Current
Federal	$	(178	)	$	278		$	(396	)
State	(116		)	(950		)	34
Total current	(294		)	(672		)	(362		)

Deferred
Federal	(434		)	7,535			(3,003		)
State	(103		)	646			(257		)
Total deferred	(537		)	8,181			(3,260		)
Income tax provision (benefit)	$	(831	)	$	7,509		$	(3,622	)

Differences between the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rate to income (loss) from continuing operations before taxes are summarized as follows:



	2018			2017			2016
Federal statutory rate	21		%	35		%	35		%
Statutory rate applied to income (loss) from continuing operations before taxes	$	(4,685	)	$	(635	)	$	(3,090	)
Plus state income taxes, net of federal tax effect	(173		)	(198		)	(145		)
Total statutory provision (benefit)	(4,858		)	(833		)	(3,235		)
Effect of differences:
Nondeductible meals and entertainment	90			161			148
Executive compensation limitation	258			—			—
Federal tax credits	(286		)	(200		)	(395		)
Reserve for uncertain tax positions	27			8			31
Goodwill	—			—			(13		)
Change in valuation allowance	3,990			6,470			106
Tax reform	—			1,749			—
Stock-based compensation	82			146			—
Other items	(134		)	8			(264		)
Income tax provision (benefit)	$	(831	)	$	7,509		$	(3,622	)

On December 22, 2017, the President signed the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. The Company substantially completed its provisional analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of such effects during the fourth quarter of 2017. Pursuant to Staff Accounting Bulletin No. 118, the Company has completed its analysis and all adjustments have been included in income from continuing operations as an adjustment to income tax expense.

The income tax benefit for the twelve months ended December 29, 2018 was $831. During the fourth quarter of 2017, the Company recorded a full valuation allowance against the deferred tax assets resulting in only refundable credits and a small amount of state taxes being recognized in the tax benefit for 2018. The Company is in a net deferred tax liability position of $568 and $1,105 at December 29, 2018 and December 30, 2017 respectively. These amounts are included in other long-term liabilities in the Company's Consolidated Balance Sheets.

The income tax expense for 2017 was $7,509, which included a charge of $1,749 related to the re-measurement of certain net deferred tax assets using the lower U.S. corporate income tax rate and a charge of $6,420 to increase our valuation allowance related to our net deferred tax asset. The majority of the increase in the valuation allowance is related to the revised treatment of net operating losses under the Tax Act. Absent the impact of the Tax Act, our effective income tax benefit rate for 2017 would have been 36.4%.

In 2016, the Company increased valuation allowances by $106 related to state income tax loss carryforwards and state income tax credit carryforwards to reflect the estimated amount of deferred tax assets that may not be realized during the carryforward periods.

Income tax payments, net of (income tax refunds) received for continuing and discontinued operations were $20 in 2018, $44 in 2017 and $(190) in 2016.

Significant components of the Company's deferred tax assets and liabilities are as follows:



	2018			2017
Deferred tax assets:
Inventories	$	4,128		$	3,146
Retirement benefits	1,718			2,200
State net operating losses	4,142			4,196
Federal net operating losses	4,560			3,204
State tax credit carryforwards	1,688			1,963
Federal tax credit carryforwards	3,721			3,365
Allowances for bad debts, claims and discounts	2,199			2,373
Other	5,646			3,649
Total deferred tax assets	27,802			24,096
Valuation allowance	(16,993		)	(12,994		)
Net deferred tax assets	10,809			11,102

Deferred tax liabilities:
Property, plant and equipment	11,377			12,207
Total deferred tax liabilities	11,377			12,207

Net deferred tax liability	$	(568	)	$	(1,105	)

At December 29, 2018, $4,560 of deferred tax assets related to approximately $21,712 of federal net operating loss carryforwards and $4,142 of deferred tax assets related to approximately $76,797 of state net operating loss carryforwards. In addition, $3,721 of federal tax credit carryforwards and $1,688 of state tax credit carryforwards were available to the Company. The federal net operating loss carryforwards and the federal tax credit carryforwards originating prior to 2018 will expire between 2029 and 2039. The state net operating loss carryforwards and the state tax credit carryforwards will expire between 2018 and 2039. A valuation allowance of $16,993 is recorded to reflect the estimated amount of deferred tax assets that may not be realized during the carryforward periods. At December 29, 2018, the Company is in a net deferred tax liability position of $568 which is included in other liabilities in the Company's Consolidated Balance Sheets.

Tax Uncertainties

Unrecognized tax benefits were $441 at December 29, 2018, $414 at December 30, 2017 and $406 at December 31, 2016. Such benefits, if recognized, would affect the Company's effective tax rate. There were no significant interest or penalties accrued as of December 29, 2018, December 30, 2017, or December 31, 2016.

The following is a summary of the change in the Company's unrecognized tax benefits:



	2018		2017		2016
Balance at beginning of year	$	414	$	406	$	375
Additions based on tax positions taken during a current period	27		8		31
Reductions related to settlement of tax matters	—		—		—
Balance at end of year	$	441	$	414	$	406

The Company and its subsidiaries are subject to United States federal income taxes, as well as income taxes in a number of state jurisdictions. The tax years subsequent to 2014 remain open to examination for federal income taxes. The majority of state jurisdictions remain open for tax years subsequent to 2014. A few state jurisdictions remain open to examination for tax years subsequent to 2013.