Provision for Income Tax

3 Months Ended

Mar. 31, 2019

9. Provision for Income Tax

Provision for income tax consists of the following:

Current income tax expense, which represents the amount of federal tax and state and local tax currently payable, including interest and penalties and amounts accrued for unrecognized tax benefits, if any, and;

Deferred income tax, which represents the net change in the deferred tax assets balance during the year, including any change in the valuation allowance.

	Three Months Ended March 31,
	2019 (unaudited)		2018 (unaudited)
Current income tax expense
Federal	$	203,000	$	272,000
State		76,000		141,000
		279,000		413,000

Deferred income tax
Federal	$	47,000	$	—
State		43,000		—
		90,000		—

Total Provision for income tax	$	369,000	$	413,000

Effective Tax Rate

For interim financial reporting, the Company estimates the effective tax rate for tax jurisdictions which is applied to the year to date income before tax. For the three months ended March 31, 2019 and 2018, the Company’s effective tax rate was 28% and 20%, respectively. The increase in the effective tax rate was due to an increase in deferred income tax expense. As of December 31, 2018, the Company recorded an income tax benefit related to the recognition of deferred tax assets of $5,576,000. For the three months ended March 31, 2019, the Company incurred deferred income tax expense corresponding to the decrease in the deferred tax assets. Deferred income tax expense was $90,000 for the three months ended March 31, 2019 compared to zero for the three months ended March 31, 2018.