Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.19.1
Income Taxes
12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

7. INCOME TAXES

The following table reconciles the United States statutory income tax rate with our effective income tax rate:

 

     Year ended December 31,  
          2018             2017             2016      

United States statutory rate

     21.0     34.0     34.0

State and local income taxes, net of federal tax benefits

     0.7     -     -

Stock-based compensation

     3.6     0.6     (1.2 %) 

Deferred rate change

     0.3     (12.9 %)      0.0

R&D credit

     0.7     -     3.5

Other

     0.7     -     -

Change in valuation allowance

     (27.0 %)      (21.7 %)      (35.2 %) 

Effective income tax rate

     -     -     -

Deferred assets and liabilities consist of the following:

 

     December 31,  
In Thousands        2018             2017      

Net operating losses

   $ 16,372     $ 9,252  

Stock-based compensation

     2,747       2,691  

Financing lease obligations

     4,009       2,131  

Tax credit carry forwards

     922       735  

Compensation and employee benefits

     474       576  

Other

     116       8  

Gross deferred tax assets

     24,640       15,393  

Less valuation allowance

     (20,329     (12,792

Net deferred tax assets

     4,311       2,601  

Fixed assets

     (4,352     (2,600

Other

     41       (1

Gross deferred tax liabilities

     (4,311     (2,601

Net deferred tax asset or liability

   $ -     $ -  

We have established a valuation allowance against our deferred tax assets described above as current evidence does not suggest we will realize sufficient taxable income of the appropriate character within the carryforward period to allow us to realize these deferred tax benefits.

We have $85.5 million of tax loss carryforwards. Of this amount, $12.0 million is state operating loss carryforwards, and $73.5 million is federal operating loss carryforwards. The federal carryforward periods are as follows: $31.6 million do not expire; zero expire in 2019 and 2020; and $41.9 million expire in 2032 and beyond. The state carryforward period is 20 years.

On December 22, 2017, the TCJA was signed into law. The TCJA results in significant revisions to the U.S. corporate income tax system, including a reduction in the U.S. corporate income tax rate, implementation of a territorial system, and a one-time deemed repatriation tax on untaxed foreign earnings. The TCJA also results in a U.S. federal blended statutory rate of 21.0% percent for us in 2018. We have completed the accounting for the income tax effects of the TCJA as of December 31, 2018.

We are subject to federal income taxes in the United States as well as various state and local jurisdictions. A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, we do not believe that we need to recognize any liabilities for uncertain tax positions at December 31, 2018.

 

The number of years with open tax audits varies depending on the tax jurisdiction. Our major taxing jurisdictions are the United States, both federal and state. Various tax examinations by United States state taxing authorities could be conducted for any open tax year, which vary by jurisdiction, but are generally from 3 to 5 years.