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

 

		December 31,
		2017				2016
Current provision:
Federal		$	-			$	22,800
State, net of state tax credits			20,100				20,900
Total current provision			20,100				43,700
Deferred provision:
Federal			13,800				97,400
State			2,000				23,300
Total deferred provision			15,800				120,700
Total income tax provision		$	35,900			$	164,400

 

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

 

		December 31,
		2017				2016
Deferred revenue		$	756,900			$	1,509,400
Deferred franchise costs			(281,000	)			(553,900	)
Allowance for doubtful accounts			-				51,400
Accrued expenses			45,300				57,400
Goodwill - component 1			(136,500	)			(120,700	)
Goodwill - component 2			55,500				86,800
Restricted stock compensation			(17,900	)			(30,800	)
Nonqualified stock options			152,900				182,100
Deferred rent			257,100				629,600
Lease abandonment			80,600				108,900
Net operating loss carryforwards			7,061,300				8,924,800
Tax credits			14,000				14,000
Charitable contribution carryover			5,200				6,500
Asset basis difference related to property and equipment			377,800				201,300
Intangibles			368,100				429,600
			8,739,300				11,496,400
Less valuation allowance			(8,875,800	)			(11,617,100	)
Net non-current deferred tax liability		$	(136,500	)		$	(120,700	)

 

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 has completed its determination of the accounting implications of the Tax Act on its accruals. However, it has reasonably estimated the effects of the Tax Act and recorded a provisional tax expense in its financial statements as of 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 As the Company completes its analysis of the Tax Act, collects and prepares necessary data, and interprets any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, it make adjustments to the provisional amounts.

 

At the Company has federal and state net operating losses of approximately and 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 following is a reconciliation of the statutory federal income tax rate applied to pre-tax accounting net loss, compared to the income tax provision in the consolidated statement of operations (in hundreds):

 

		For the Years Ended December 31,
		2017								2016
		Amount				Percent				Amount				Percent
Expected federal tax benefit		$	(1,100,000	)			(34.00	)%		$	(5,106,100	)			(34.00	)%
State tax provision, net of federal benefit			(140,200	)			(4.33	)			(735,500	)			(4.90	)
Effect of (decrease) increase in valuation allowance			(2,741,300	)			(84.73	)			6,042,900				40.24
Other permanent differences			16,700				0.52				108,800				0.72
Stock Compensation			(131,900	)			(4.08	)			-				-
Impact of enacted tax reform			3,946,100				121.97				-				-
State deferred tax true up			185,000				5.72				-				-
Other, net			1,500				0.05				(145,700	)			(0.97	)
Provision		$	35,900				1.11	%		$	164,400				1.09	%

 

The state tax benefit stems from the resolution of various voluntary disclosure agreements with multiple states where the Company had yet been in compliance. In addition, the Company is responsible to pay certain minimum and franchise taxes to jurisdictions in which it does business.

 

Changes in income tax expense related primarily to changes in pretax losses 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 the impact of enacted tax reform which is mostly offset by the valuation allowance.

 

For the year ended and, the Company recorded a liability for income taxes for operations and uncertain tax positions of and approximately respectively, of which and approximately respectively, represent penalties and interest and are recorded in the “other liabilities” section of the accompanying consolidated balance sheets. Interest and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses. Management made a determination that the Company was in compliance with several state and local tax jurisdictions in which the Company was doing business. Accordingly, management undertook to analyze its tax exposures, both income and otherwise, with respect to jurisdictions in which compliance was deemed to be inadequate and has entered into Voluntary Disclosure Agreements (VDAs) with the taxing authorities.

  

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

 

		2017								2016
		Tax				Interest/ penalties				Tax				Interest/ penalties
Uncertain tax positions - January 1		$	13,200			$	26,800			$	32,600			$	33,000
Gross increases - tax positions in prior period			-				-				-				-
Gross decreases - tax positions in prior period			(13,200	)			(26,800	)			(19,400	)			(6,200	)
Uncertain tax positions - December 31		$	-			$	-			$	13,200			$	26,800

 

The Company’s 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.