NOTE 4. INCOME TAXES

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. Our effective tax rate for the three and nine months ended September 30, 2017 was 61.5% and 110.2%, respectively. Our effective tax rate for the three and nine months ended September 30, 2016 was (25.8%) and 50.9%, 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 nine months ended September 30, 2017 and 2016 are as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Statutory federal tax provision (benefit)	$	38,000		$	17,000		$	(43,000	)	$	(38,000	)
State income tax expense (benefit)	9,500			8,000			9,000			24,000
Income tax credits	(25,000		)	(20,000		)	(75,000		)	(60,000		)
Change in uncertain tax positions	2,500			—			7,500			—
Return to provision true up	74,000			(22,000		)	74,000			(22,000		)
Foreign tax benefit	(42,500		)	44,000			(124,500		)	44,000
Other	12,843			(40,000		)	10,939			(4,000		)

Income tax benefit	$	69,343		$	(13,000	)	$	(141,061	)	$	(56,000	)

At September 30, 2017, we had $44,500 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.