INCOME TAXES

The Tax Cuts and Jobs Act (the "Tax Act") was enacted on December 22, 2017. The Tax Act makes broad and complex changes to the U.S. tax code, including a permanent reduction in the U.S. federal corporate income tax rate to 21% starting in 2018. Previously, the Company was subject to a 34% U.S. federal corporate income tax rate.

Income tax expense (benefit) for the three and nine months ended September 30, 2019 and September 30, 2018 varies from the amount that would result by applying the applicable U.S. federal corporate income tax rate of 21% to loss from continuing operations before income tax expense (benefit). The following table summarizes the differences:



(in thousands)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Income tax benefit at United States statutory income tax rate	$	(807	)	$	(578	)	$	(335	)	$	(1,926	)
Valuation allowance	813			772			(421		)	2,127
Non-deductible compensation	27			(638		)	61			(515		)
Disposition of subsidiary	—			332			(24		)	332
State income tax	33			(27		)	91			106
Change in unrecognized tax benefits⁽¹⁾	67			25			208			155
Indefinite life intangibles	54			23			141			69
Foreign operations subject to different tax rates	4			(3		)	(13		)	(57		)
Other	(29		)	(50		)	(91		)	9
Income tax expense (benefit)	$	162		$	(144	)	$	(383	)	$	300
(1) Includes interest and penalty expense related to unrecognized tax benefits.

The Company maintains a valuation allowance for its gross deferred tax assets at September 30, 2019 and December 31, 2018. The Company's operations have generated substantial operating losses in prior years. These losses can be available to reduce income taxes that might otherwise be incurred on future taxable income; however, it is uncertain whether the Company will generate the taxable income necessary to utilize these losses or other reversing temporary differences. This uncertainty has caused management to place a full valuation allowance on its September 30, 2019 and December 31, 2018 net deferred tax asset, excluding the deferred income tax asset and liability amounts set forth in the paragraph below. In the quarter ended March 31, 2019, the Company released into income $0.8 million of its valuation allowance, as a result of its acquisition of Geminus, due to net deferred income tax liabilities that are expected to reverse during the period in which the Company will have deferred income tax assets available.

The Company carries net deferred income tax liabilities of $29.0 million and $28.5 million at September 30, 2019 and December 31, 2018, respectively. At September 30, 2019, $8.0 million relates to deferred income tax liabilities scheduled to reverse in periods after the expiration of the Company's consolidated U.S. net operating loss carryforwards, $21.6 million relates to deferred income tax liabilities associated with land and indefinite lived intangible assets, $0.6 million relates to deferred income tax assets associated with state income taxes and $0.0 million relates to deferred income tax assets associated with alternative minimum tax credits. At December 31, 2018, $8.0 million relates to deferred income tax liabilities scheduled to reverse in periods after the expiration of the Company's consolidated U.S. net operating loss carryforwards, $21.1 million relates to deferred income tax liabilities associated with land and indefinite lived intangible assets, $0.5 million relates to deferred income tax assets associated with state income taxes and $0.1 million relates to deferred income tax assets associated with alternative minimum tax credits. The Company considered a tax planning strategy in arriving at its December 31, 2018 net deferred income tax liabilities.

As of September 30, 2019 and December 31, 2018, the Company carried a liability for unrecognized tax benefits of $1.4 million and $1.4 million, respectively, which is included in income taxes payable in the consolidated balance sheets. The Company classifies interest and penalty accruals, if any, related to unrecognized tax benefits as income tax expense. The Company recorded income tax expense of $0.1 million and $0.0 million related to interest and penalty accruals for the three months ended September 30, 2019 and September 30, 2018, respectively ($0.2 million and $0.2 million for the nine months ended September 30, 2019 and September 30, 2018, respectively). At September 30, 2019 and December 31, 2018, the Company carried an accrual for the payment of interest and penalties of $1.3 million and $1.1 million, respectively, included in income taxes payable in the consolidated balance sheets.