15. Income Taxes

Effective Income Tax Rate – Three Months Ended March 31, 2018 and March 31, 2017

The Company’s estimated effective income tax rate for the three months ended March 31, 2018 of 32.3% resulted in income tax expense of $4,498. The Company’s tax rate differs from the federal statutory tax rate of 21% (reduced from 35% due to the passage of the Tax Cuts and Jobs Act in December 2017) primarily due to a valuation allowance on foreign net operating losses and state and local income taxes, partly offset by tax windfalls associated with the vesting of stock-based compensation awards.

The Company’s estimated effective income tax rate for the three months ended March 31, 2017 of 53.6% resulted in income tax expense of $7,942. The Company’s tax rate differs from the federal statutory tax rate of 35% primarily due to a valuation allowance on foreign net operating losses, tax shortfalls associated with the vesting of stock-based compensation awards and state and local income taxes.

Net Operating Losses – U.S.

The Company’s pre-tax federal net operating losses for tax purposes (“NOLs”) at March 31, 2018 was $3,147 which expire in 2024. The net operating loss carryforwards have been reduced by the impact of annual limitations described in the Internal Revenue Code Section 382 that arose as a result of an ownership change.

Net Operating Losses – International

The Company’s European and Canadian subsidiaries generated NOLs outside the U.S. These tax effected NOLs were $4,347 at March 31, 2018. The Company established a full valuation allowance related to these NOLs as it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized.

Deferred Tax Assets

A summary of the components of the Company’s deferred tax assets at March 31, 2018 and December 31, 2017 are as follows:


	March 31, 2018			December 31, 2017
Deferred tax assets:
NOLs – Foreign	$	4,347		$	3,841
Stock-based compensation		1,655			1,474
Deferred rent liability		1,245			1,257
NOLs – U.S.		779			909
Accrued expenses		769			526
Other		255			488

Deferred tax assets		9,050			8,495

Deferred tax liabilities:
Unrealized gains		1,716			1,718
Fixed assets		1,498			1,498
Goodwill and intangible assets		436			388

Deferred tax liabilities		3,650			3,604

Total deferred tax assets less deferred tax liabilities		5,400			4,891
Less: valuation allowance		(4,347	)		(3,841	)

Deferred tax assets, net	$	1,053		$	1,050