On December 22, 2017 (the “Enactment Date”), H.R. 1, originally known as the Tax Cuts and Jobs Act, was enacted. The new law (Public Law No.115-97 hereinafter referred to as the “Tax Act”) includes significant changes to the U.S. corporate income tax system including, but not limited to, lowering the statutory corporate tax rate from 35% to 21%, limiting or eliminating certain deductions and the repeal of Corporate AMT tax regime. The majority of the provisions were applicable to the Company beginning with fiscal 2019. For fiscal 2018, the Company computed its income tax expense using a blended federal tax rate of 32.6%. The 21% federal tax rate applies to the fiscal year ending March 2, 2019 and each year thereafter.

The provision for income tax expense (benefit) from continuing operations was as follows:

A reconciliation of the expected statutory federal tax and the total income tax expense (benefit) from continuing operations was as follows:

* Federal statutory rate included in the above table is 21.0%, 21.0% and 32.6%, respectively, for the fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018.

Net loss for fiscal 2020 from continuing operations included income tax expense of $387,607, of which $347,599 relates to establishing a full valuation allowance for federal deferred tax assets and an increase to the valuation allowance for state net deferred tax assets that may not be realized based on the Company's most recent assessment of all available evidence including future projections of taxable income.

Net loss for fiscal 2019 from continuing operations included income tax expense of $77,477, of which $212,252 relates to the increase in valuation allowance for federal and state net deferred tax assets that may not be realized based on the Company's future projections of taxable income.

Net loss for fiscal 2018 from continuing operations included income tax expense of $305,987, of which $324,765 relates to the federal income tax rate change on the re-measurement of net deferred tax assets pursuant to the Tax Act. Additionally, the Company recorded within state income taxes the net impact of the Pennsylvania tax law change which resulted in a substantial increase to the state net operating loss carryforwards and a corresponding increase to the valuation allowance.

The Company recognized tax expense of $7,011, $91,067 and $749,704 within Net loss (income) from discontinued operations, net of tax, in the Statement of Operations in fiscal 2020, fiscal 2019 and fiscal 2018, respectively. The Company’s effective income tax rate from discontinued operations included adjustments to the valuation allowance of $0, $(2,417) and $(32,870) for fiscal 2020, fiscal 2019 and fiscal 2018, respectively.

The tax effect of temporary differences that gave rise to significant components of deferred tax assets and liabilities consisted of the following at February 29, 2020 and March 2, 2019:


	2020		2019
Deferred tax assets:
Accounts receivable	$	29,734	$	36,607
Accrued expenses		99,637		107,356
Liability for lease exit costs		772		37,333
Pension, retirement and other benefits		98,408		87,397
Long-lived assets		303,630		320,561
Operating lease liabilities		903,020		—
Credits		35,197		48,884
Net operating losses		1,284,831		1,084,139
Other		654		—
Total gross deferred tax assets		2,755,883		1,722,277
Valuation allowance		(1,673,119)		(1,091,416)
Total deferred tax assets		1,082,764		630,861
Deferred tax liabilities:
Outside basis difference		5,616		5,392
Inventory		242,238		215,588
Operating lease right-of-use assets		818,230		—
Other		—		797
Total gross deferred tax liabilities		1,066,084		221,777
Net deferred tax assets	$	16,680	$	409,084

A reconciliation of the beginning and ending amount of unrecognized tax benefits from continuing operations was as follows:


	2020		2019		2018
Unrecognized tax benefits	$	219,839	$	230,210	$	8,939
Increases to prior year tax positions		440		155		—
Decreases to tax positions in prior periods		(6,448)		(111)		(1,015)
Increases to current year tax positions		—		—		224,408
Settlements		—		—		—
Divestitures		—		(543)		(1,607)
Lapse of statute of limitations		(15,506)		(9,872)		(515)
Unrecognized tax benefits balance	$	198,325	$	219,839	$	230,210

The amount of the above unrecognized tax benefits at February 29, 2020, March 2, 2019 and March 3, 2018 which would impact the Company’s effective tax rate, if recognized, was $23,439, $28,482 and $31,377 respectively. Additionally, any impact on the effective rate may be mitigated by the valuation allowance that is remaining against the Company’s net deferred tax assets.

The Company believes that it is reasonably possible that a decrease of up to $13,210 in unrecognized tax benefits related to state exposures may be necessary in the next twelve months however, management does not expect the change to have a significant impact on the results of operations or the financial position of the Company.

The Company recognizes interest and penalties related to tax contingencies as income tax expense. The Company recognized an expense/(benefit) for interest and penalties in connection with tax matters of $(220), $(769) and $7,058 for fiscal years 2020, 2019 and 2018, respectively. As of February 29, 2020 and March 2, 2019 the total amount of accrued income tax-related interest and penalties was $6,332 and $6,553, respectively.

The Company files U.S. federal income tax returns as well as income tax returns in those states where it does business. The consolidated federal income tax returns are closed for examination through fiscal year 2016. However, any net operating losses that were generated in these prior closed years may be subject to examination by the IRS upon utilization. Tax examinations by various state taxing authorities could generally be conducted for a period of three to five years after filing of the respective return.

Net Operating Losses and Tax Credits

At February 29, 2020, the Company had federal net operating loss carryforwards of approximately $1,152,396. Of these, $900,383 will expire, if not utilized, between fiscal 2029 and 2031. An additional $178,246 will expire, if not utilized, between fiscal 2032 and 2038.

At February 29, 2020, the Company had state net operating loss carryforwards of approximately $11,413,504, the majority of which will expire ratably through fiscal 2031; the net tax effect of these carryforwards is $1,046,331 and are reflected in the table above.

At February 29, 2020, the Company had federal business tax credit carryforwards of $18,427 the majority of which will expire between 2021 and 2025. In addition to these credits, the Company had an alternative minimum tax

credit carryforwards of $6,748 which will be refunded to the Company between fiscal 2021 and 2022. The Company recorded a receivable for the refundable AMT tax credits of $6,748 for fiscal 2020.

Valuation Allowances

The valuation allowances as of February 29, 2020 and March 2, 2019 apply to the net deferred tax assets of the Company. The Company maintained a valuation allowance of $1,673,119 and $1,091,416 at February 29, 2020 and March 2, 2019, respectively. The primary driver of the increase for fiscal 2020 and fiscal 2019 is to reduce federal and state net deferred tax assets that may not be realized based on the Company's future projections of taxable income.