Note 8 - Income Taxes

The components of income tax expense (benefit) are as follows:

(in thousands)	Year Ended December 31, 2017			Year Ended December 31, 2016
Federal - current	$	-		$	-
State - current		6			(142	)
Total current	$	6			(142	)

Federal - deferred		(6,037	)		(1,752	)
State - deferred		(5,402	)		(105	)
Change in valuation allowance		(8,653	)		1,857
Total deferred		(20,092	)		-
Income tax expense (benefit)	$	(20,086	)	$	(142	)

The components of pretax income (loss) and the difference between income taxes computed at the statutory federal rate and the provision for income taxes are as follows:

(in thousands)	Year Ended December 31, 2017			Year Ended December 31, 2016

Income (loss) before income taxes	$	(68,143	)	$	(3,361	)
Tax expense (benefit) :
Tax at statutory federal rate	$	(23,851	)	$	(1,176	)
State income taxes		(5,019	)		(142	)
Rate change		16,047			-
Permanent items		-			-
Other		1,390			(681	)
Change in valuation allowance		(8,653	)		1,857
Income tax expense (benefit)	$	(20,086	)	$	(142	)

A reconciliation of the United States federal statutory rate to the Company's effective income tax rate is as follows:

	Year Ended December 31, 2017			Year Ended December 31, 2016
Tax at statutory federal rate		35.0	%		35.0	%
State income taxes		7.0			4.2
Rate change		(24.0	)		-
Permanent difference, tax credits and other adjustments		-			-
Other		(2.0	)		20.3
Change in valuation allowance		13.0			(55.3	)
Effective income tax rate		29.0	%		4.2	%

For the year ended December 31, 2017, the Company recorded an income tax benefit partially offset by a state tax expense, attributable to a provision for a tax on capital imposed by the state jurisdictions. The income tax benefit for the year ended December 31, 2017, is attributable to a release of a valuation allowance in relation to the AMT Credit carryforwards and resulting deferred tax asset due to recognition of AMT Credit carryforwards projected to be refundable as provided for in the 2017 Tax Cuts and Jobs Act (the "2017 Tax Act") as further detailed herein. For the year ended December 31, 2017, other includes amounts relating to deferred tax true-ups.

State income tax amounts for the year ended December 31, 2017, reflect a provision for a tax on capital imposed by the state jurisdictions. State income tax amounts for the year ended December 31, 2016, reflect a net benefit related to current year and prior year state tax true-ups. For the year ended December 31, 2016, other includes amounts relating to deferred tax true-ups. The Company has not been notified of any potential tax audits by any federal, state or local tax authorities.

The Company believes the statutes of limitations for the assessment of additional federal and state tax liabilities are generally closed for tax years prior to 2014. Interest and/or penalties related uncertain tax positions, if applicable, would be included as a component of income tax expense (benefit). The accompanying financial statements do not include any amounts for interest and/or penalties.

The utilization of certain carryforwards and carrybacks is subject to limitations under U.S. federal income tax laws. Based on the Company's federal tax returns as filed and to be filed, the Company estimates it has federal NOL carryforwards available to reduce future federal taxable income which would expire if unused, as indicated below.

The federal NOL carryforwards as of December 31, 2017 are as follows:

Tax Year Originating	Tax Year Expiring	Amount

2006	2026	$	500,000
2007	2027		12,700,000
2008	2028		4,600,000
2009	2029		2,400,000
2010	2030		1,900,000
2011	2031		1,900,000
2013	2033		3,700,000
2014	2034		4,900,000
2015	2035		4,200,000
2016	2036		3,400,000
2017	2037		4,400,000
		$	44,600,000

Alternative Minimum Tax ("AMT") Credit carryforwards available, which can be used to offset income generated in future years which are not subject to expiration, are as follows:

		Amount
AMT Credits carryforwards		$	21,600,000

As noted above the Company has AMT Credit carryforwards from prior tax years. In accordance with the 2017 Tax Act AMT Credit carryforwards, subject to certain estimated reduction adjustments to the amount indicated above, are expected to be claimed by the Company as refundable on tax returns to be filed in future tax years and at various percentages as noted below.

The Company's AMT Credit carryforward amount(s) projected to be claimed as refundable for each tax year are as follows:

Tax Year (a)	Declining balance of the AMT Credit carryforward amount(s) available for each tax year (a) (b)		% of AMT Credit carryforward amount(s) available to be claimed as refundable for each tax year			AMT Credit carryforward amount(s) projected to be claimed as refundable for each tax year (a)(b)

2018	$	20,092,000		50	%	$	10,046,000
2019		10,046,000		50	%		5,023,000
2020		5,023,000		50	%		2,511,500
2021		2,511,500		100	%		2,511,500
						$	20,092,000

(a) Assumes no regular federal income tax liability in tax years presented above which would reduce any AMT Credit carryforward amount(s) ultimately refunded.

(b) The declining balance of the AMT Credit carryforward amount(s) available for each tax year and the AMT Credit carryforward amount(s) projected to be claimed as refundable for each tax year are net of certain estimated adjustments from the previously disclosed AMT Credit carryforward amounts.

The 2017 Tax Act makes broad and complex changes to the Internal Revenue Code of 1986, as amended (the "Code"), including, among other changes, significant changes to the U.S. corporate tax rate and certain other changes to the Code that impact the taxation of corporations. The U.S. Treasury Department, the Internal Revenue Service ("IRS"), and other standard-setting bodies could interpret or issue guidance on how provisions of the 2017 Tax Act will be applied or otherwise administered that differs from our interpretation. As we complete our analysis of the 2017 Tax Act, collect and prepare necessary data, and interpret any additional guidance, we may make adjustments to provisional amounts that we have recorded that may materially impact our provision for income taxes in the period in which the adjustments are made. Additionally, there is risk relating to assumptions regarding the outcome of tax matters, based in whole or in part upon consultation with outside advisors; risk relating to potential unfavorable decisions in tax proceedings; and risks regarding changes in, and/or interpretations of federal and state income tax laws. Additionally, the Company's tax advisors indicate that the IRS typically has broad discretion to examine taxpayer tax returns, even after refunds have been paid to taxpayers, which could result in adjustments to AMT Credit carryforward amounts claimed as refundable and/or AMT Credit carryforward amounts ultimately received.

The Company's management is continuing to work closely with outside advisors on the Company's tax matters as they relate to the 2017 Tax Act and on the various federal tax return matters for the numerous interrelated tax years, including the provisions and application of the 2017 Tax Act along with the amounts and timing of any AMT Credit carryforward refunds. The AMT Credit carryforwards by the Company from prior tax years and related refund(s) could potentially be subject to IRS or other tax authority audits, including possible IRS Joint Committee review and/or approval. Neither the Company nor its outside advisors can predict whether or not the IRS and/or other tax authorities will review the Company's tax returns to be filed and/or as filed in prior years.

Based on the Company's state tax returns as filed and to be filed, the Company estimates that it has state NOL carryforwards to reduce future state taxable income, which would expire if unused.

The state NOL carryforwards as of December 31, 2017 are as follows:

Tax Year Originating	Tax Year Expiring	Amount

2011	2031	$	1,800,000
2013	2033		2,700,000
2014	2034		4,200,000
2015	2035		4,100,000
2016	2036		2,800,000
2017	2037		1,200,000
		$	16,800,000

The Company has a deferred tax asset arising primarily from NOL carryforwards and AMT credits as follows:

	December 31, 2017			December 31, 2016
Deferred tax asset	$	47,800,000		$	36,400,000
Valuation allowance		(27,708,000	)		(36,400,000	)
Net deferred tax asset recognized	$	20,092,000		$	-

A valuation allowance was released in relation to the AMT Credit carryforwards which are projected to be refundable as part of the 2017 Tax Act enacted in December 2017. A full valuation allowance remains on the remaining deferred tax asset amounts, as management has no basis to conclude that realization is more likely than not. Management does not believe that any significant changes in unrecognized income tax benefits are expected to occur over the next year.