INCOME TAXES

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

The Company files a consolidated federal income tax return with its subsidiaries.

Income tax expense consists of the following:

	Year Ended December 31,
	2017		2016
Federal income tax expense (benefit):
Current	$	51,000	$	—
		51,000		—
State and local:
Current		102,000		—
		102,000		—
Total:
Current	$	153,000	$	—

Reconciliation between the income tax provision and income taxes computed by applying the statutory Federal income tax rate to income (loss) before income taxes is as follows:

	Year Ended December 31,
	2017			2016
Expected income tax (benefit) at statutory Federal tax rate (34%)	$	947,000		$	(1,897,000	)
State and local taxes, net of Federal tax effect		36,000			(400,000	)
Increase in valuation allowance		—			1,704,000
Nondeductible transaction costs related to change in control		—			482,000
Expiration of contribution carryforward		—			85,000
Temporary differences		(503,000	)		—
Net operating loss		(327,000	)		—
Permanent difference		—			19,000
Other					7,000
Income tax	$	153,000		$	—

The principal items giving rise to deferred tax assets (liabilities) are as follows:

	December 31,
	2017		2016
Deferred tax assets:
Net operating  loss credit carryforwards	$	10,390,000	$	10,316,000

Employee stock based compensation	—		237,000
Retail brokerage accounts (a)	—		71,000
Contribution carryover	182,000		158,000
Furniture, equipment and leasehold improvements	(54,000	)	312,000
Intangible assets	(137,000	)
Accrued settlement liability	—		340,000

Other		—			8,000
Total		10,381,000			11,442,000
Valuation allowance		(10,381,00	)		(11,442,000	)
Net deferred tax assets	$	—		$	—

(a) Relates to receivable from business sold to affiliate treated as an installment sale for tax purposes.

(b) Related to acquired retail discount brokerage accounts, which are being amortized over 15 years for tax purposes and have been fully amortized for financial reporting purposes.

Due to cumulative losses incurred by the Company during the current and prior two years, the Company is unable to conclude that it is more likely than not that it will realize its deferred tax asset in excess of the deferred tax liability and, accordingly, has recorded a valuation allowance to fully offset such amount at December 31, 2017 and 2016.

At December 31, 2017, the Company has state net operating loss carryforwards aggregating $16.6 million, which expires from 2029 through 2036. In addition, the Company has federal net operating loss carryforwards of $23.4 million at December 31, 2017, which expires from 2030 through 2036. Utilization of the Company’s net operating loss carryforwards are subject to annual limitations of approximately $900,00 per year under Internal Revenue Code section 382 due to the change in ownership.

The Company applied the “more-likely-than not” recognition threshold to all tax positions taken or expected to be taken in a tax return which resulted in no unrecognized tax benefits reflected in the financial statements as of December 31, 2017. The Company classifies interest and penalties that would accrue according to the provisions of relevant tax law as income taxes.

Tax years 2014 and thereafter are subject to examination by federal and certain tax authorities. For other states the 2010 through 2013 tax years remain open to examination. The Company is currently under tax examination by New York State for the years 2012 to 2014.