12.

INCOME TAXES

The provision (benefit) for income taxes on continuing operations are as follows:


	Years ended June 30,
	2017			2016		2015
Current	$	54		$	2	$	38
Deferred		(566	)		4,556		855

Total income tax expense (benefit)	$	(512	)	$	4,558	$	893

Net deferred income tax assets recorded in the consolidated balance sheets are as follows:


	June 30,
	2017			2016
Net operating loss carryforward	$	7,751		$	8,529
Depreciation expense		(255	)		11
Allowances for receivables		153			714
Accrued expenses		963			1,155
Intangible assets		2,218			2,147
Pension liabilities		231			282
Other		59			136

		11,120			12,974
Less valuation allowance		(11,120	)		(10,652	)

Net deferred income tax assets	$	0		$	2,322

The differences between income taxes on continuing operations at the Federal statutory rate and the effective tax rate were as follows:


	Years ended June 30,
	2017			2016			2015
Income tax at Federal statutory rate	$	(840	)	$	(2,501	)	$	469
Changes in valuation allowance—continuing operations		468			7,350			215
U.S. state income taxes, net of federal benefit		(154	)		(405	)		116
Share option expense		22			20			12
Other		(8	)		94			81

Total income tax (benefit) expense—continuing operations	$	(512	)	$	4,558		$	893

In accordance with the Financial Accounting Standards Board Accounting Standards Codification (‘ASC”) 740, we evaluate our deferred taxes quarterly to determine if adjustments to our valuation allowance are required based on the consideration of available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, our historical operating results, our expectation of future results of operations, the duration of applicable statuary carryforward periods and conditions of the healthcare industry. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related temporary differences in the financial basis and the tax basis of the assets become deductible. The value of our deferred tax assets will depend on applicable income tax rates.

At June 30, 2017, consistent with the above process, we evaluated the need for a valuation against our deferred tax assets and determined that it was more likely than not that none of our deferred tax assets would be realized. We determined that it was more likely than not that none of our deferred tax assets would be realized during the fiscal year ended June 30, 2018 and future years and accordingly provided a valuation allowance of $11,120 at June 30, 2017. We conducted our evaluation by considering available positive and negative evidence to determine our ability to realize our deferred tax assets. In our evaluation, we gave more significant weight to evidence that was objective in nature as compared to subjective evidence. Also, more significant weight to evidence that we judged directly related to our current financial performance as compared to less current evidence and future plans. The Company provided a $10,652 deferred tax valuation allowance as of June 30, 2016 so that the net deferred income tax assets were $2,322 as of June 30, 2016.

The principal negative evidence that led us to determine at June 30, 2017 that substantially all the deferred tax assets should have a full valuation allowances was the three-year cumulative pre-tax loss from continuing operations as well as the underlying negative business conditions for rural hospital businesses in which our Healthcare Services segment businesses operate.

For Federal income tax purposes, at June 30, 2017, the Company had approximately $11,600 of estimated net operating loss carry-forwards available for use in future years subject to the limitations of the provisions of Internal Revenue Code Section 382. The net operating loss carryforwards expire in 2024. The Company’s tax returns for the periods prior to the fiscal year ended June 30, 2014 are no longer subject to potential federal and state income tax examination.