t deferred tax assets and liabilities at March 31, 2018 and April 1, 2017 consisted of the following:



(In thousands)	2018			2017
Deferred tax assets and liabilities:
Inventory valuation and warranty costs	$	7,904		$	11,246
Receivables and other non-current assets	(49		)	(274		)
Payroll-related accruals	5,130			7,574
Intangible assets and investments	(272		)	(382		)
Accrued liabilities	2,322			3,006
Deferred revenue	821			3,478
Property, plant and equipment	3,142			5,029
Other comprehensive income	3			456
Tax loss and credit carryforwards, net of unrecognized tax benefits	43,201			73,805
Other (liabilities) assets	(185		)	259
Total deferred tax assets	62,017			104,197
Valuation allowance	(18,499		)	(103,315		)
Net deferred tax assets	$	43,518		$	882

The Company had approximately $57.4 million and $84.7 million in tax assets resulting from federal, state and foreign net operating losses and tax credits as of March 31, 2018 and April 1, 2017, respectively as follows:



(In thousands)	2018		2017
Federal net operating losses	$	5,071	$	35,566
State net operating losses	1,868		3,679
Foreign operating losses and tax credits	17,826		12,504
Federal research credits	24,127		22,590
State research credits	5,438		4,409
Federal minimum tax credit	—		935
Federal capital losses	3,039		5,015
	$	57,369	$	84,698

The federal and state net operating losses expire on various dates through fiscal 2039. The majority of the foreign tax credits expire on various dates through fiscal 2029. The federal and most of the state research credits expire on various dates through fiscal 2039. Certain state research credits and the federal minimum tax credits are available indefinitely. The state net operating losses and credits are reflected net of their federal tax impact.

A valuation allowance is required if it is more likely than not that all or a part of a deferred tax asset will not be realized in the future. A valuation allowance of $18.5 million and $103.3 million existed as of March 31, 2018 and April 1, 2017, respectively. The $84.8 million decrease in valuation allowance in 2018 was due to (1) the release of $42.3 million of valuation allowance resulting from positive evidence of future utilization of existing deferred tax assets, including three years of cumulative pre-tax income; (2) the utilization of $24.9 million of net operating losses in 2018; and (3) changes in the statutory tax rate caused by the Tax Act, which drove a further reduction in the allowance of $17.6 million related to the revaluation of deferred tax assets at the new statutory rate. The remaining valuation allowance relates to assets that are expected to expire prior to utilization, primarily foreign and state-related tax credits, and expiring capital loss carryforwards.

The components of income before income taxes and the (benefit from) provision for income taxes, all from continuing operations, were as follows:



(In thousands)	2018			2017			2016
Income (loss) before income taxes:
Domestic	$	61,539		$	(32,646	)	$	(13,385	)
Foreign	14,414			(4,786		)	1,112
Total income (loss) before income taxes	$	75,953		$	(37,432	)	$	(12,273	)
Provision for (benefit from) income taxes:
Current:
U.S. federal and state	$	(248	)	$	(379	)	$	8
Foreign	2,614			557			916
Total current	2,366			178			924
Deferred:
U.S. federal and state	(42,329		)	—			—
Foreign	(307		)	(201		)	(940		)
Total deferred	(42,636		)	(201		)	(940		)
Total benefit from income taxes	$	(40,270	)	$	(23	)	$	(16	)

The portion of the tax benefit derived from stock-based compensation that is allocated as common stock was zero in 2018, 2017 and 2016.

A reconciliation of the Company’s effective tax rate to the United States federal statutory income tax rate was as follows:



	2018		2017		2016
U.S. federal statutory income tax rate	31.5	%	35.0	%	35.0	%
State income taxes, net of federal benefit	3.7		(0.3	)	(0.5	)
Tax credits	(4.5	)	4.2		17.1
Non-U.S. income taxed at different rates	(3.3	)	(0.9	)	14.3
Changes in unrecognized tax benefits	4.5		(0.3	)	(4.1	)
Change in valuation allowance	(111.2	)	(25.0	)	(51.8	)
Stock compensation	(3.3	)	(2.6	)	(10.2	)
Intangible write-off	—		(5.1	)	—
Acquisitions	—		(5.9	)	—
Change in Rate	22.5		—		—
Mandated Repatriation of Foreign Earnings	9.0		—		—
Other, net	(1.9	)	1.0		0.3
Effective tax rate	(53.0	)%	0.1	%	0.1	%

The Company operates globally but considers its significant tax jurisdictions to include Canada, China, France, Japan, Korea, Singapore, Taiwan, the United Kingdom and the United States. The Company currently benefits from a tax incentive program in Singapore pursuant to which it pays no Singapore income tax with respect to its manufacturing income. The incentive period ends on June 30, 2021.

The Company provides for income taxes on its foreign subsidiaries’ taxable income based on the effective income tax rate in each respective jurisdiction. Prior to 2018, the Company provided for deferred taxes on the undistributed earnings of a subsidiary, except to the extent that the income is intended to be indefinitely reinvested or remitted in a tax-free liquidation. The Tax Act required a deemed repatriation of earnings at a reduced rate to transition from a worldwide to a territorial tax regime. The Company recognized $19.5 million in taxable income as a result of the deemed dividend and reversed the deferred taxes on previously undistributed earnings. Prior to 2018, the foreign jurisdictions where the Company was permanently reinvested included Singapore and China (Wuhan Topwin Optoelectronics Technology Co., Ltd.). Due to the changes from the Tax Act, the Company no longer intends to permanently reinvest earnings.

As of March 31, 2018, the following tax years remained subject to examination by the major tax jurisdictions indicated:



Major Jurisdictions	Open Tax Years
Canada	2011 and forward
China	2008 and forward
France	2015 and forward
Japan	2011 and forward
Korea	2013 and forward
Singapore	2012 and forward
Taiwan	2013 and forward
United Kingdom	2014 and forward
United States	2004 and forward

A reconciliation of the beginning and ending amount of the consolidated liability for unrecognized income tax benefits for the years ended March 31, 2018, April 1, 2017 and April 2, 2016 was as follows:



(In thousands)	2018			2017			2016
Beginning unrecognized tax benefits balance	$	10,744		$	10,385		$	9,654
Gross increases for tax positions of prior years	2,909			62			731
Gross decreases for tax positions of prior years	(397		)	(242		)	—
Gross increases for tax positions for current year	1,060			539			—
Ending unrecognized tax benefits balance	$	14,316		$	10,744		$	10,385

The unrecognized tax benefits were presented as long-term income taxes payable on the Consolidated Balance Sheets or netted against deferred tax assets, where applicable. If recognized, the net impact to the effective tax rate associated with the unrecognized tax benefits would be $0.1 million and zero as of March 31, 2018 and April 1, 2017, respectively. The Company records interest and penalties related to unrecognized tax benefits as tax expense. The interest and penalties were minimal in 2018, 2017 and 2016. The Company does not expect a decrease in unrecognized tax benefits within the next twelve months due to a lapse in statute of limitations. The Company also expects the annual increases to be consistent with prior years and does not anticipate any significant changes in unrecognized tax benefits in the next twelve months as the result of examinations.