Income Taxes

The provision for income taxes consists of the following:



	2017			2016
Current tax provision	$	(91,477	)	$	5,180
Deferred tax benefit	(1,406,599		)	(34,440		)
Total tax benefit	$	(1,498,076	)	$	(29,260	)

In 2017, we recognized an income tax benefit of $1,498,076 due to the passing of the Tax Cuts and Jobs Act in December 2017. The new law reduced corporate income tax rates from 35% to 21%. As a result, the deferred tax assets and liabilities recorded in the consolidated balance sheets were reevaluated at the new tax rates. Both the deferred tax assets and the deferred tax liabilities were reduced. The decrease in the deferred tax liability resulted in the one-time income tax benefit.

A reconciliation of the expected Federal statutory rate to our actual rate as reported for each of the periods presented is as follows:



	2017		2016
Federal statutory rate	34	%	34	%
State income tax rate, net of federal benefit	4	%	(1	%)
Permanent differences	(2	%)	(2	%)
Temporary differences	—	%	(5	%)
Impact in changes in tax law	22	%	—	%
Change in valuation allowance	(25	%)	(22	%)
	33	%	4	%

Deferred Income Taxes

Deferred income taxes are the result of temporary differences between book and tax basis of certain assets and liabilities, timing of income and expense recognition of certain items and net operating loss carry-forwards.

We assess temporary differences resulting from different treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded in the consolidated balance sheets. We evaluate the realizability of our deferred tax assets on a regular basis, an exercise that requires significant judgment. In the course of this evaluation we considered our recent history of tax losses, the economic conditions in which we operate, recent organizational changes and our forecasts and projections. We believe it is more likely than not that essentially none of our deferred tax assets will be realized, and we have recorded a valuation allowance for the net deferred tax assets that may not be realized as of December 31, 2017 and 2016.

The following is a schedule of the deferred tax assets and liabilities as of December 31, 2017 and 2016:



	2017			2016
Deferred tax assets:
Net operating loss carry forward	$	29,622,135		$	27,202,348
Intangible assets	1,278,900			2,239,700
Stock based expenses	1,176,900			1,484,900
Accrued expense	362,000			311,000
Deferred rent	33,400			69,300
Allowance for doubtful accounts	23,200			9,800
Other	7,200			14,200
Subtotal	32,503,735			31,331,248
Less valuation allowance	(32,503,735		)	(31,331,248		)
Total	—			—
Deferred tax liabilities:
Intangible assets and property and equipment	2,307,600			3,702,300
Other	24,300			26,200
Total	2,331,900			3,728,500
Total deferred tax liabilities	$	(2,331,900	)	$	(3,728,500	)

The net operating losses amounted to approximately $82,514,000 and expire beginning 2021 through 2038. Pursuant to Internal Revenue Service Code Section 382, the use of certain of the Company’s net operating loss carry forwards are limited due to a cumulative change in ownership.

We are currently open to audit under the statute of limitations by the Internal Revenue Service for the years ending December 31, 2014 through 2016. Our state income tax returns are open to audit under the statute of limitations for the same periods.

We recognize interest and penalties related to income taxes in income tax expense. We have incurred no penalties and interest for the years ended December 31, 2017 and 2016.