Income tax provision (benefit) reported in the consolidated statements of operations is comprised of the following (rounded to hundreds):

 

		December 31,
		2018				2017
Current provision (benefit):
Federal		$	–			$	–
State, net of state tax credits			39,300				20,100
Total current provision (benefit)			39,300				20,100
Deferred provision (benefit):
Federal			(90,000	)			13,800
State			12,900				2,000
Total deferred provision (benefit)			(77,100	)			15,800
Total income tax provision (benefit)		$	(37,800	)		$	35,900

 

The following are the components of the Company’s net deferred taxes for federal and state income taxes (rounded to hundreds):

 

		December 31,
		2018				2017
Deferred revenue		$	2,632,400			$	756,900
Deferred franchise costs			(574,100	)			(281,000	)
Accrued expenses			361,100				45,300
Goodwill - Component 1			(194,700	)			(136,500	)
Goodwill - Component 2			52,500				55,500
Restricted stock compensation			(30,800	)			(17,900	)
Nonqualified stock options			184,400				152,900
Deferred rent			237,900				257,100
Lease Abandonment			96,500				80,600
Net operating loss carryforwards			6,175,600				7,061,300
Tax credits			14,000				14,000
Charitable contribution carryover			15,500				5,200
Asset basis difference related to property and equipment			458,600				377,800
Intangibles			435,900				368,100
			9,864,800				8,739,300
Less valuation allowance			(9,941,500	)			(8,875,800	)
Net non-current deferred tax liability		$	(76,700	)		$	(136,500	)

 

The Tax Act was signed into law on The Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from to eliminating certain deductions, imposing a mandatory -time tax on accumulated earnings of foreign subsidiaries, introducing new tax regimes, and changing how foreign earnings are subject to U.S. tax. The Company finalized the effects of the Tax Act and recorded the impact in its financial statements as of The company recorded a tax expense for the impact of the Tax Act of approximately million. This amount is a remeasurement of federal net deferred tax assets resulting from the permanent reduction in the U.S. statutory corporate tax rate to from

 

At the Company had federal and state net operating losses of approximately million and million, respectively. These net operating losses are available to offset future taxable income and will begin to expire in for federal purposes and for state purposes. The Company has research & development credits of that will begin to expire in

 

The following is a reconciliation of the statutory federal income tax rate applied to pre-tax accounting net income (loss), compared to the income tax provision (benefit) in the consolidated statement of operations (rounded to hundreds):

 

		For the Years Ended December 31,
		2018								2017
		Amount				Percent				Amount				Percent
Expected federal tax expense (benefit)		$	45,200				-21.0	%		$	(1,100,000	)			-34.0	%
State tax provision, net of federal benefit			(57,000	)			26.5	%			(140,200	)			-4.3	%
Effect of increase in valuation allowance			22,600				-10.5	%			(2,741,300	)			-84.7	%
Other permanent differences			13,200				-6.1	%			16,700				0.5	%
Stock compensation			(40,800	)			18.9	%			(131,879	)			-4.1	%
Impact of enacted tax reform			–				0.0	%			3,946,100				122.0	%
State deferred tax true up			–				0.0	%			185,000				5.7	%
Bargain purchase gain			(16,100	)			7.5	%			–				0.0	%
Return to provision adjustments			(4,900	)			2.2	%			–				0.0	%
Other, net			–				0.0	%			1,500				0.0	%
Provision (benefit)		$	(37,800	)			17.5	%		$	35,900				1.1	%

 

Changes in our income tax expense related primarily to changes in pretax income during the year ended as compared to year ended and the effective rate was and respectively. The difference is primarily due to state taxes, stock compensation and adjustment of the deferred revenue deferred tax asset due to the adoption of ASC

 

For the years ended and the Company had material interest or penalties related to uncertain tax positions. Interest and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses.   

 

The following table sets forth a reconciliation of the beginning and ending amount of uncertain tax positions during the tax years ended and (rounded to hundreds):

 

		2018								2017
		Tax				Interest/ penalties				Tax				Interest/ penalties
Unrecognized tax benefit - January 1		$	–			$	–			$	13,200			$	26,800
Gross decreases - tax positions in prior period			–				–				(13,200	)			(26,800	)
Unrecognized tax benefit - December 31		$	–			$	–			$	–			$	–

 

Our tax returns for tax years subject to examination by tax authorities include through the current period for state and through the current period for federal purposes.