NOTE 4. INCOME TAXES

Historically, the Company estimates the effective tax rate for the full fiscal year and records a quarterly income tax provision based on the anticipated rate and refines our estimates quarterly based on facts and circumstances including discrete events, by each jurisdiction. For the current quarter, the Company is utilizing an estimated year-to-date effective tax rate rather than the estimated annual rate approach as a result of changes in the forecast. Our effective tax rate for the three and six months ended June 30, 2017 was 92.9% and 87.4%, respectively. Our effective tax rate for the three and six months ended June 30, 2016 was 27.7% and 26.8%, respectively. The increase in our current year-to-date effective rate versus prior year is due mainly to the higher level of pretax book loss and the related increase in the foreign tax rate differential benefit.

The differences between federal income taxes computed at the federal statutory rate and reported income taxes for the three and six months ended June 30, 2017 and 2016 are as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Statutory federal tax provision benefit	$	(74,500	)	$	(89,000	)	$	(81,000	)	$	(55,000	)
State income tax expense (benefit)	(6,900		)	13,000			(500		)	16,000
Income tax credits	(25,000		)	(17,000		)	(50,000		)	(40,000		)
Change in uncertain tax positions	2,500			—			5,000			—
Foreign tax benefit	(96,300		)	—			(82,000		)	—
Other	(5,400		)	24,000			(1,500		)	36,000

Income tax benefit	$	(205,600	)	$	(69,000	)	$	(210,000	)	$	(43,000	)

At June 30, 2017, we had $57,000 of net uncertain tax benefit positions remaining in other long-term liabilities related to research and development credits that would increase our effective income tax rate if recognized. At December 31, 2016, we had $52,000 of net uncertain tax benefit positions recorded in other long-term liabilities that would reduce our effective income tax rate if recognized.