Income Taxes

The provision for income tax (benefit) expense consists of (in thousands):

	2018			2017
Current:
Federal	$	-		$	-
State		(213	)		-
Total current		(213	)		-
Deferred:
Federal		(989	)		-
State		-			-
Total deferred		(989	)		-
Income tax (benefit) expense from continuing operations	$	(1,202	)	$	-

Income tax (benefit) expense from discontinued operations	$	-		$	(35	)

A reconciliation of the difference between the federal statutory income tax rate and the effective income tax rate follows:

	201 8			2017
Federal statutory rate		21.0	%		35.0	%
State tax, net of federal benefit		2.3			(12.3	)
State tax credits and adjustments		(11.8	)		(1.7	)
Change in federal tax rate		-			(54.6	)
Alternative minimum tax		67.7			-
Valuation allowance increase		(11.5	)		38.8
Other, net		14.5			(4.7	)
Effective income tax rate		82.2	%		0.5	%

The reconciliation of the difference between the federal statutory rate and the effective income tax rate for the

2017

period relates to the discontinued operation.

We have completed our analysis of the income tax effects of the Tax Act and recorded all final adjustments during

2018.

As noted in

2017,

the Tax Act repeals the corporate alternative minimum tax, or AMT, regime, including claiming a refund and full realization of remaining AMT credits. During

2018,

we further analyzed the nature, validity, and recoverability of the AMT-related deferred tax credit carryforwards and recorded a tax benefit of

$988,000

for the credits that will be refundable in future years.

The income tax effects of temporary differences that comprise deferred tax assets and liabilities at

December 31

follow (in thousands):

	20 1 8			2017
Noncurrent deferred tax assets (liabilities):
Accounts receivable	$	-		$	46
Other accrued expenses		50			339
Property, plant and equipment		(1	)		(659	)
Notes receivable fair value adjustment		413			-
Employee benefits		95			1,970
Contribution carryforward		-			-
AMT credit		698			1,192
Net operating loss		7,743			6,733
Gross non-current deferred tax assets		8,998			9,621
Less valuation allowance		(8,504	)		(9,621	)
Net noncurrent deferred tax assets	$	494		$	-

We have U.S. federal net operating loss carryforwards of approximately

$33.7

million which are available to reduce future taxable income. The federal net operating loss will begin expiring in

2033.

We have combined state net operating loss carryforwards of

$23.9

million that will expire at various times beginning in

2027.

During

2018,

we recorded a non-cash credit to our valuation allowance of

$1.1

million against our

December 31, 2018

deferred tax assets. The primary assets which are covered by this valuation allowance are employee benefits and net operating losses in excess of the amounts which can be carried back to prior periods. The valuation allowance was calculated in accordance with the provisions of ASC

740,

Income Taxes

, which requires an assessment of both positive and negative evidence when measuring the need for a valuation allowance. Our results over the most recent

four

-year period were heavily affected by our business restructuring activities. Our cumulative loss represented sufficient negative evidence to require a valuation allowance. We intend to maintain a valuation allowance until sufficient positive evidence exists to support its reversal, resulting in

deferred tax asset balance being recognized. Should we determine that we will

not

be able to realize all or part of our deferred tax asset in the future, an adjustment to the deferred tax asset will be charged to income in the period such determination is made.

The unrecognized tax benefits activity for the year ended

December 31

follows (in thousands):

	201 8			2017
Unrecognized tax benefits balance at January 1	$	454		$	471
Gross (decrease) increases in tax positions of prior years		(213	)		(17	)
Unrecognized tax benefits balance at December 31	$	241		$	454

As of

December 31, 2018

and

2017,

we had approximately

$34,000

and

$80,000

of accrued interest related to uncertain tax positions, respectively.

Total amount of unrecognized tax benefits that would affect our effective tax rate if recognized is

$190,000

December 31, 2018

and

$358,000

December 31, 2017.

The

2010

through

2016

tax years remain open to examination by major taxing jurisdictions.