7.	INCOME TAXES

The income tax provision from operations consists of the following:

Year ended December 31, (in thousands)
	201 8			2017
Current	$	284		$	28
Deferred		(280	)		--
Total	$	4		$	28

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

Year ended December 31,	201 8			2017
Statutory rate		21	%		35	%
Change in valuation allowance		(21	%)		(29	%)
Effective rate		--	%		6	%

Net deferred tax assets consist of the following at

December 31:

(in thousands)	2018			2017
Deferred tax assets:
Federal, state and foreign loss carryforwards	$	--		$	794
Deferred revenue		23			11
Federal and state tax credits		294			757
Other		438			402
Total deferred tax asset		755			1,964
Less valuation allowance		(475	)		(1,964	)
Net deferred tax asset	$	280		$	--

Federal and state tax credits of

$294,000

included in the above table expire at various dates between

2033

and

2035.

December 22, 2017,

the U.S. federal government enacted the Tax Cuts and Jobs Act of

2017,

which, among other provisions, decreases the maximum federal corporate income tax rate from

35%

21%

beginning

January 1, 2018.

ASC

740,

Income Taxes, requires all deferred tax liabilities and assets to be adjusted for the effect of a change in tax rates by including such effect in income from continuing operations in the reporting period that includes the enactment date. In accordance with this guidance, the Company included a charge to tax expense to decrease the deferred tax asset for the year ended

December 31, 2017

of approximately

$805,000

related to the decrease in the federal corporate income tax rate for future periods. This charge was offset with a change in the valuation allowance recorded related to deferred taxes.

We had a deferred tax asset of approximately

$0.8

million and

$2.0

million at

December 31, 2018

and

December 31, 2017,

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

2018

and

2017

$0.5

million and

$2.0

million, respectively, because the company believes that it is more likely than

not

that the amount will

not

be realized. Due to utilization of net operating loss carryforwards and expected future profitability, we concluded that a valuation allowance was

longer needed on certain components of our deferred tax assets. However, we have maintained a valuation allowance on deferred tax assets resulting from unrealized capital losses as we are

not

able to conclude that is it more likely than

not

that these will be realized due to the unpredictability of future capital gains.

deferred taxes have been provided on temporary differences related to investments in foreign subsidiaries because these investments are considered to be permanent.

We have recognized tax benefits from all tax positions we have taken, and there has been

adjustment to any carry forwards (net operating loss or research and development credits) in the past

two

years. There were

unrecognized tax benefits as of

December 31, 2018

and

2017.

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

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

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.