5. Income Taxes

The components of current and deferred federal and state income tax (benefits) provision are as follows:


	Year Ended March 31,
	2019		2018		2017
	(In thousands)
Loss from continuing operations before income taxes	$	(7,780)	$	(5,586)	$	(5,231)

Current income tax provision:
Federal		—		3		71
State		36		45		62
Total current tax provision		36		48		133

Deferred income tax benefit:
Federal		—		(1,849)		(166)
State		—		(17)		(11)
Total deferred benefit provision		—		(1,866)		(177)
Provision (benefit) for income taxes on continuing operations		36		(1,818)		(44)
Loss from continuing operations, net of taxes	$	(7,816)	$	(3,768)	$	(5,187)

The reconciliation of our income tax (benefit) provision to taxes computed at U.S. federal statutory rates is as follows:


	Year Ended March 31,
	2019		2018		2017
	(In thousands)
Benefit for income taxes at statutory rates	$	(1,634)	$	(1,720)	$	(1,778)
Change in federal tax rate		—		4,134		—
State income taxes net of federal benefit		(620)		(255)		(124)
Impairment charges		—		—		737
Tax credits		(343)		(567)		(125)
Compensation charges		199		(324)		29
Change in valuation allowance		2,385		(3,153)		1,148
Other		49		67		69
Provision (benefit) for income taxes	$	36	$	(1,818)	$	(44)

The components of deferred tax assets and liabilities are as follows:


	March 31,
	2019		2018
	(In thousands)
Deferred tax assets:
Net operating losses	$	5,335	$	2,853
Capitalized R&D		2,347		2,734
Credit carry forwards		2,806		2,043
Deferred compensation and payroll		1,655		1,603
Bad debt allowance and other reserves		618		567
Deferred rent		202		235
Property and equipment		139		844
Other, net		309		203
Total deferred tax assets		13,411		11,082
Valuation allowance		(12,250)		(9,814)
Total deferred tax assets, net of valuation allowance		1,161		1,268
Deferred tax liabilities:
Acquired intangibles		(759)		(866)
Goodwill		(467)		(467)
Total deferred tax liabilities		(1,226)		(1,333)
Net deferred tax liabilities	$	(65)	$	(65)

At March 31, 2019, we had $1.2 million in federal alternative minimum tax credit carryforwards, approximately $629,000 of which were classified as a current income tax receivable included in the prepaid expenses and other current assets in the accompanying consolidated balance sheet, and approximately $551,000 of which were classified as a noncurrent income tax receivable included in the other assets in the accompanying consolidated balance sheet as we expect this amount to be refunded over the next three years. We also had $1.8 million in federal research credits that begin to expire in 2031 and $1.2 million in state tax credits that begin to expire in 2023. We had $17.4 million of federal net operating loss carryforwards at March 31, 2019 that do not expire as a result of recent tax law changes. We had $5.7 million of federal net operating loss carryforwards at March 31, 2019 that begin to expire in 2022. We also had $8.0 million of state net operating loss carryforwards at March 31, 2019 that begin to expire in 2031.

In assessing the realizability of our deferred tax assets, we review all available positive and negative evidence, including reversal of deferred tax liabilities, potential carrybacks, projected future taxable income, tax planning strategies and recent financial performance. As the Company has sustained a cumulative pre-tax loss over the trailing three years, we considered it appropriate to maintain valuation allowances of $12.3 million and $9.8 million against our deferred tax assets at March 31, 2019 and 2018, respectively. We will continuously reassess the appropriateness of maintaining a valuation allowance.

The Tax Cuts and Jobs Act ("TCJA") was enacted on December 22, 2017 and reduced U.S. corporate income tax rates to 21.0% as of January 1, 2018. The rate change became effective during Fiscal 2018 resulting in a blended statutory tax rate of 30.8% for Fiscal 2018. As a consequence of the tax legislation, the Company recorded a decrease in its net deferred tax assets of $4.1 million and a decrease in the valuation allowance maintained against its deferred tax assets of $5.8 million. The estimated impact of the tax legislation was an income tax benefit of $1.7 million, of which $1.1 million was due to the release of valuation allowance that had been maintained against alternative minimum tax credit carryforwards, which were made refundable by the tax legislation, and approximately $640,000 was due to the remeasurement of a deferred tax liability related to indefinite-lived assets.

On December 22, 2017, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) directing taxpayers to consider the impact of the tax legislation as “provisional” when it does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. In accordance with SAB 118, the income tax effects recorded in Fiscal 2018 represented the Company’s best estimate based on its current interpretation of this tax legislation. We completed our accounting for the tax legislation in Fiscal 2019 and did not recognize any material adjustments to the provisional amounts recorded in Fiscal 2018.

Unrecognized Tax Benefits

As of March 31, 2019 and 2018, our gross unrecognized tax benefits were approximately $687,000 and $586,000, respectively, of which approximately $580,000 and $461,000, respectively, are netted against certain noncurrent deferred tax assets. The amounts that would affect our effective tax rate if recognized are approximately $609,000 and $513,000, respectively.

We recognize interest and/or penalties related to income tax matters in income tax expense. As of March 31, 2019 and 2018, we had accrued cumulatively approximately $42,000 and $43,000, respectively, for the payment of potential interest and penalties. The total amount of interest and penalties recognized in the consolidated statements of operations for the fiscal years ended March 31, 2019 and 2018 was approximately $1,000 and $3,000, respectively.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:


	Year Ended March 31,
	2019		2018		2017
	(In thousands)
Gross unrecognized tax benefits at beginning of year	$	586	$	426	$	394
Increases for tax positions taken in prior years		2		62		18
Decreases for tax positions taken in prior years		—		—		(8)
Increases for tax positions taken in the current year		116		122		59
Lapse in statute of limitations		(17)		(24)		(37)
Gross unrecognized tax benefits at March 31	$	687	$	586	$	426

We do not anticipate a significant change in gross unrecognized tax benefits within the next twelve months. We are subject to taxation in the U.S. and various state tax jurisdictions. We are subject to U.S. federal tax examination for fiscal tax years ended March 31, 2016 or later, and state and local income tax examination for fiscal tax years ended March 31, 2015 or later. However, if net operating loss carryforwards that originated in earlier tax years are utilized in the future, the amount of such NOLs from such earlier years remain subject to review by tax authorities.