Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Schedule of Components of Income Tax Expense (Benefit)

Income tax (benefit) expense consists of the following:



(in thousands)	Years ended December 31
	2019			2018

Current income tax expense	$	423		$	423
Deferred income tax benefit	(786		)	(108		)
Income tax (benefit) expense	$	(363	)	$	315

Schedule of Effective Income Tax Rate Reconciliation

Income tax (benefit) expense varies from the amount that would result by applying the applicable U.S. corporate income tax rate of 21% to loss from continuing operations before income tax (benefit) expense. The following table summarizes the differences:



(in thousands)	Years ended December 31
	2019			2018
Income tax benefit at U.S. statutory income tax rate	$	(658	)	$	(4,609	)
Tax Act adjustment	(156		)	(82		)
Valuation allowance	1			4,562
Indefinite life intangibles	194			92
Change in unrecognized tax benefits	276			233
Compensation	208			(470		)
Investment income	(218		)	481
State income tax	135			48
Other	(145		)	60
Income tax (benefit) expense for continuing operations	$	(363	)	$	315

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities are presented as follows:



(in thousands)	December 31,
	2019			2018
Deferred income tax assets:
Losses carried forward	$	181,427		$	180,012
Unpaid loss and loss adjustment expenses and unearned premiums	2,331			1,670
Intangible assets	2,515			2,538
Debt issuance costs	966			1,017
Investments	748			841
Deferred rent	664			727
Deferred revenue	1,135			783
Other	1,020			693
Valuation allowance	(173,411		)	(171,456		)
Deferred income tax assets	$	17,395		$	16,825
Deferred income tax liabilities:
Indefinite life intangibles	$	(17,269	)	$	(16,660	)
Depreciation and amortization	(15,299		)	(16,121		)
Fair value of debt	(5,747		)	(6,528		)
Land	(4,435		)	(4,435		)
Intangible assets	(620		)	—
Deferred revenue	(262		)	—
Investments	(971		)	(168		)
Deferred acquisition costs	(1,807		)	(1,450		)
Deferred income tax liabilities	$	(46,410	)	$	(45,362	)
Net deferred income tax liabilities	$	(29,015	)	$	(28,537	)

Summary of Operating Loss Carryforwards

Amounts, originating dates and expiration dates of the KFSI Tax Group's consolidated U.S. net operating loss carryforwards, totaling $839.3 million, are as follows:



Year of net operating loss	Expiration date	Net operating loss (in thousands)

2007	2027	50,877
2008	2028	53,895
2009	2029	496,889
2010	2030	92,058
2011	2031	39,865
2012	2032	30,884
2013	2033	30,779
2014	2034	7,245
2016	2036	16,006
2017	2037	20,848

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending unrecognized tax benefits, exclusive of interest and penalties, is as follows:



(in thousands)	December 31,
	2019		2018
Unrecognized tax benefits - beginning of year	$	1,381	$	1,367
Gross additions - current year tax positions	—		—
Gross additions - prior year tax positions	—		14
Gross reductions - prior year tax positions	—		—
Gross reductions - settlements with taxing authorities	—		—
Impact due to expiration of statute of limitations	—		—
Unrecognized tax benefits - end of year	$	1,381	$	1,381