
	Year Ended December 31,
	2020		2019		2018
Current:
U.S. Federal	$	—	$	—	$	(8)
State	61		17		591
Foreign	(368)		(246)		(314)
Total current	(307)		(229)		269
Deferred:
U.S. Federal	—		—		—
State	(8)		8		11
Foreign	9		27		18
Total deferred	1		35		29
Total provision for income tax expense (benefit)	$	(306)	$	(194)	$	298

Total income tax expense (benefit) differs from the expected income tax expense (benefit), computed by applying the federal statutory rate of 21% in 2020, 2019 and 2018, to earnings before income taxes as follows (in thousands):


	Year Ended December 31,
	2020		2019		2018
Expected income tax benefit	$	(1,997)	$	(1,393)	$	(697)
Federal R&D credit	(67)		(54)		(32)
Refundable AMT credit	—		—		(12)
Effect of deferred rate change	—		—		8
Foreign tax	76		27		38
Non-deductible equity expense	258		15		13
Non-deductible stock issuance costs	(82)		3		85
Foreign unremitted earnings	—		—		130
Change in valuation allowance	1,655		1,379		408
State income taxes, net of federal tax effect	(168)		(219)		455
Other, net	19		48		(98)
Total provision for income tax expense (benefit)	$	(306)	$	(194)	$	298


	December 31,
	2020		2019
Deferred tax assets:
Inventory provisions and uniform capitalization	$	1	$	—
Accounts receivable allowances	8		8
Non-qualified stock option and restricted stock expense	245		220
Deferred revenue	302		218
Lease liabilities	199		290
Loss and credit carryforwards of U.S. subsidiary	25,844		24,717
Loss carryforward of foreign subsidiaries	91		145
Excess interest expense	420		496
Other accruals and reserves	326		101
Total deferred tax assets before valuation allowance	27,436		26,195
Less valuation allowance	(26,999)		(25,406)
Total deferred tax assets	$	437	$	789
Deferred tax liabilities:
Acquired intangibles	$	(347)	$	(465)
Right of use assets	(78)		(207)
Fixed assets	7		(26)
Other	—		(70)
Total deferred tax liabilities	$	(418)	$	(768)
Total net deferred tax assets	$	19	$	21

As of December 31, 2020, the Company had $94.0 million of net operating loss carryforwards for U.S. federal tax purposes and $66.3 million of net operating loss carryforwards for various states. The loss carryforwards for state tax purposes will expire between 2021 and 2038 if not utilized. At December 31, 2020, $85.8 million of federal net operating loss carryforwards (losses originating in tax years beginning prior to January 1, 2018), expire in years 2022 through 2037, and federal net operating loss of $8.2 million generated since 2018 can be carryforward indefinitely and utilization is limited to 80% of taxable income. The net operating loss expiration related to the state income tax returns that the Company files varies by state.

As a result of its acquisition of Qumu, Inc. in October 2011, utilization of U.S. net operating losses and tax credits of Qumu, Inc. are subject to annual limitations under Internal Revenue Code Sections 382 and 383, respectively. The Company has not completed an IRC Section 382 study since 2011. It is possible additional ownership changes have occurred, which may result in

The Company assessed that the valuation allowance against its U.S. deferred tax assets is still appropriate as of December 31, 2020 and 2019, based on the consideration of all available positive and negative evidence, using the “more likely than not” standard required by ASC 740, Income Taxes. During 2019 the U.K. shifted from a net deferred tax liability to net deferred tax asset position. As such, the Company no longer believes that it is more likely than not that the future results of the operations in the U.K. will generate sufficient taxable income to utilize the deferred tax assets. As of December 31, 2020 and 2019, a full valuation allowance has been applied against its U.K. deferred tax assets. As of December 31, 2020, the Company had a cumulative foreign tax loss carryforward of $2.1 million in the U.K. This amount can be carried forward indefinitely. The valuation allowance will be reviewed quarterly and will be maintained until sufficient positive evidence exists to support the reversal of the valuation allowance.

On December 22, 2017, the Tax Cuts and Jobs Act (the Tax Act) was enacted, significantly altering U.S. corporate income tax law. Many of the new elements of the Tax Act became effective during 2018, including limitations on the deductibility of interest expense, limitations on executive compensation, as well as international provisions. The Company has considered and incorporated the new provisions into its tax calculations. Such provisions included in the Tax Act did not significantly impact the Company in 2020 and 2019, due to the full valuation allowance on deferred tax assets.

The Company may repatriate cash associated with undistributed earnings of its foreign subsidiaries, such that they are not reinvested indefinitely. The repatriation of cash and cash equivalents held by the Company's international subsidiaries would not result in an adverse tax impact on cash given that the future tax consequences of repatriation are expected to be insignificant as a result of the Tax Cuts and Jobs Act of 2017.


	Year Ended December 31,
	2020		2019
Gross unrecognized tax benefits at beginning of year	$	1,780	$	1,724
Increases related to:
Prior year income tax positions	—		7
Current year income tax positions	57		49
Decreases related to:
Prior year income tax positions - closure of statute of limitations	(1)		—
Gross unrecognized tax benefits at end of year	$	1,836	$	1,780

Included in the balance of unrecognized tax benefits at December 31, 2020 are potential benefits of $608,000 that, if recognized, would affect the effective tax rate. The change in the liability for gross unrecognized tax benefits reflects an increase in reserves established for federal and state uncertain tax positions. The Company does not anticipate that the total amount of unrecognized tax benefits as of December 31, 2020 will change significantly by December 31, 2021.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Total accrued interest and penalties amounted to $50,000 and $28,000 on a gross basis at December 31, 2020 and 2019, respectively, and are excluded from the reconciliation of unrecognized tax benefits presented above. Interest and penalties recognized in the consolidated statements of operations related to uncertain tax positions amounted to net tax expense of $22,300 and $22,000 in 2020 and 2019, respectively.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. As of December 31, 2020, the Company was no longer subject to income tax examinations for taxable years before 2018 in the case of U.S. federal taxing authorities, and taxable years generally before 2016 in the case of major state and local taxing jurisdictions.