Note 3 - Income Taxes

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

3.

  Income Taxes

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the tax rates and laws expected to be in effect when the differences are expected to reverse.

For the

three

and

nine

months ended

September 30, 2019

 and

2018

, there was

no

income tax benefit due to net operating loss carryforwards ("NOLs") and we recorded a full valuation allowance against our net deferred taxes. 

At

December 31, 2018

, we had, subject to the limitation discussed below,

$245.2

 million of pre-

2018

NOLs and

$25.2

 million of

2018

NOL carryforwards for U.S. tax purposes.  Our pre-

2018

NOLs will expire in varying amounts from

2023

through

2038,

if

not

utilized; and can offset

100%

of future taxable income for regular tax purposes. Any NOLs arising after

January 1, 2018

can generally be carried forward indefinitely and can offset up to

80%

of future taxable income for regular tax purposes. Effective

January 1, 2018

the alternative minimum tax

no

longer applies to corporations.

The use of our NOLs will be limited if there is an "ownership change" in our common stock, generally a cumulative ownership change exceeding

50%

during a

three

year period, as determined under Section

382

of the Internal Revenue Code. As of

September 30, 2019

, we have 

not

had an ownership change as defined by Section

382.

Given historical losses, uncertainties exist as to the future utilization of the NOL. Therefore, we established a valuation allowance of

$67.3

 million for deferred tax assets at

December 31, 2018

 and 

September 30, 2019

As of

September 30, 2019

, we did

not

have any accrued interest or penalties related to uncertain tax positions. The tax years

2013

through

2018

 remain open to examination by the tax jurisdictions to which we are subject.

Tax legislation, commonly referred to as the Tax Cuts and Jobs Act (H.R.

1

), was enacted on

December 22, 2017.

ASC

740,

Accounting for Income Taxes

, requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after

December 31, 2017.

Since our federal deferred tax asset was fully offset by a valuation allowance, the reduction in the U.S. corporate income tax rate to

21%

did

not

materially affect our financial statements. Significant provisions  that 

may

impact income taxes in future years include: the repeal of the corporate Alternative Minimum Tax, the limitation on the current deductibility of net interest expense in excess of

30%

of adjusted taxable income for levered balance sheets, a limitation on utilization of NOLs generated after tax year

2017

to

80%

of taxable income, the unlimited carryforward of NOLs generated after tax year

2017,

temporary

100%

expensing of certain business assets, additional limitations on certain general and administrative expenses, and changes in determining the excessive compensation limitation. Currently, we do 

not

anticipate paying federal income taxes in the near term due to any of the legislative changes, primarily due to the availability of our NOL carryforwards. Future interpretations relating to the recently enacted U.S. federal income tax legislation which vary from our current interpretation and possible changes to state tax laws in response to the recently enacted federal legislation

may

have a significant effect on this projection.