Note

12.

Income Taxes

The components of income tax expense (benefit) from continuing operations are (in thousands):

	For the Years Ended December 31,
	2018			2017
Current:
Federal	$	(113	)	$	(1	)
State and local		(176	)		15
Total current	$	(289	)	$	14

Below is a reconciliation of the expected federal income tax expense (benefit) using the federal statutory tax rate of

21%

to the Company’s actual income tax benefit and resulting effective tax rate (in thousands).

	For the Years Ended December 31,
	2018			2017

Income tax expense (benefit) at statutory rate	$	984		$	(3,802	)

State income taxes, net of federal tax benefit		36			(54	)
Valuation allowance		(688	)		(131,234	)
Change in federal tax rate		-			33,640
Change in state tax rate		-			100,899
Bankruptcy reorganization		17			746
Uncertain tax positions		(371	)		(4	)
Other		(267	)		(177	)
Total income tax expense (benefit)	$	(289	)	$	14

Prior to

2017,

the Company concluded that it was

longer more likely than

not

that it would realize a portion of its deferred tax assets. As such, the Company maintained a full valuation allowance against its net deferred tax assets as of both

December 31, 2018

and

2017

The Company's determination of the realizable deferred tax assets requires the exercise of significant judgment, based in part on business plans and expectations about future outcomes. In the event the actual results differ from these estimates in future periods, the Company

may

need to adjust the valuation allowance, which could materially impact our financial position and results of operations. The Company will continue to assess the need for a valuation allowance in future periods. As of

December 31, 2018

and

2017

, the Company maintained a valuation allowance of

$164.0

million and

$162.7

million, respectively, for its deferred tax assets.

Significant components of the Company’s deferred tax assets and liabilities as of

December 31, 2018

and

2017

are (in thousands):

	December 31,
	2018			2017
Deferred tax assets:
Basis difference – investments	$	-		$	8,015
Federal NOL carryforwards		153,139			145,608
State NOL carryforwards		9,016			8,301
Other		1,866			2,756
Gross deferred tax asset		164,021			164,680
Valuation allowance		(163,992	)		(162,708	)
Deferred tax asset		30			1,972
Deferred tax liabilities:
Other		30			1,972
Deferred tax liability		30			1,972
Net deferred tax asset	$	-		$	-

As of

December 31, 2018

, the Company had a federal NOL of approximately

$729.2

million, including $

250.3

million in losses on mortgage securities that have

not

been recognized for income tax purposes. The federal NOL

may

be carried forward to offset future taxable income, subject to applicable provisions of the Internal Revenue Code (the "Code"). If

not

used, these NOLs will expire in years

2025

through

2037.

Due to tax reform enacted in

2017,

NOLs created after

2017

carry forward indefinitely; the portion of NOLs that will

not

expire is

$94.6

million. The Company has state NOL carryforwards arising from both combined and separate filings from as early as

2004.

The state NOL carryforwards

may

expire as early as

2018

and as late as

2037.

The activity in the accrued liability for unrecognized tax benefits for the years ended

December 31, 2018

and

2017

was (in thousands):

	For the Years Ended December 31,
	2018			2017
Beginning balance	$	328		$	331
Gross increases – tax positions in current period		1			22
Lapse of statute of limitations		(318	)		(25	)
Ending balance	$	11		$	328

Accounting for income taxes, including uncertain tax positions, represents management's best estimate of various events and transactions, and requires significant judgment. As of

December 31, 2018

and

2017

, the total gross amount of unrecognized tax benefits was $

0.1

million and $

0.3

million, respectively, which also represents the total amount of unrecognized tax benefits that would impact the effective tax rate. The Company anticipates a reduction of unrecognized tax benefits of less than

$0.1

million due the lapse of statute of limitations in the next

twelve

months. The Company does

not

expect any other significant change in the liability for unrecognized tax benefits in the next

twelve

months. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. The benefit for interest and penalties recorded in income tax expense was

not

significant for

2018

and

2017

. There were accrued interest and penalties of less than

$0.1

million as of both

December 31, 2018

and

2017

. The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and local jurisdictions. Tax years

2015

2018

remain open to examination for both U.S. federal income tax and major state tax jurisdictions.