Note 7 - Income Taxes

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

7. INCOME TAXES

The income tax provision from continuing operations consists of the following:

Year ended December 31, (in thousands)	201 6		2015
Current	$	--	$	3
Total	$	--	$	3

Following is a reconciliation of estimated income taxes at the statutory rate from continuing operations to estimated tax expense (benefit) as reported:

Year ended December 31,	201 6			201 5
Statutory rate		35	%		35	%
Change in valuation allowance		(35%	)		(35%	)
Effective rate		0	%		0	%

Net deferred tax assets consist of the following at

December

31:

(in thousands)	201 6			201 5
Deferred tax assets:
Federal, state and foreign loss carryforwards	$	1,440		$	1,850
Deferred revenue		30			68
Federal and state tax credits		642			653
Other		823			(79	)
Total deferred tax asset		2,935			2,492
Less valuation allowance		(2,935	)		(2,492	)
Net deferred tax asset	$	--		$	--

Federal and state tax credits of

$642,000

included in the above table expire at various dates between

2024

and

2035.

We had a deferred tax asset of approximately

$2.9

million and

$2.5

million at

December

31,

2016

and

December

31,

2015,

respectively. The deferred tax asset has been offset by a valuation allowance in

2016

and

2015

of

$2.9

million and

$2.5

million, respectively, because the company believes that it is more likely than not that the amount will not be realized. No deferred taxes have been provided on temporary differences related to investments in foreign subsidiaries because these investments are considered to be permanent.

As of

December

31,

the following net operating loss carryforwards, if unused as offsets to future taxable income, will expire during the following years:

(in thousands)	201 6		201 5
2021	$	689	$	689
2022		849		849
2030		--		4
2031		--		298
Thereafter		2,578		3,445
Total	$	4,116	$	5,285

Of the net operating losses detailed above,

$1.5

million are related to net operating losses that CoreCard incurred prior to its acquisition by the company. These net operating losses are subject to Separate Return Limitation Year rules. These net operating loss carryforwards expire in years

2021

and

2022.

We have recognized tax benefits from all tax positions we have taken, and there has been no adjustment to any carry forwards (net operating loss or research and development credits) in the past

two

years. There were

no

unrecognized tax benefits as of

December

31,

2016

and

2015.

Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were

no

accrued interest or penalties associated with any unrecognized tax benefits,

nor

was any interest expense recognized during the periods presented. We have determined we have

no

uncertain tax positions.

We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership equals or exceeds

80%,

as well as individual subsidiary returns in various states and foreign jurisdictions.