Income Taxes

The following table sets forth the components of income tax expense (in thousands):



	Year Ended December 31,
	2015		2014
Current:
State	3		4
	3		4
Deferred:
Federal	154		124
State	13		11
	167		135
Income tax expense	$	170	$	139

Our effective tax rate differs from the statutory federal tax rate as shown in the following table (in thousands):



	Year Ended December 31,
	2015			2014
U.S. federal income taxes at the statutory rate	$	(692	)	$	(916	)
State taxes, net of federal effects	(53		)	(77		)
Permanent differences	13			22
Impact of state tax rate change to deferred	119			1,282
Expired net operating loss carry-forwards	4,026			—
Other	12			297
Change in valuation allowance	(3,255		)	(469		)
Income tax expense	$	170		$	139

The tax effect of the temporary differences that give rise to significant portions of the deferred tax assets and liabilities is presented below (in thousands):



	December 31,
	2015			2014
Deferred tax assets:
Tax benefit of operating loss carry forward	$	10,385		$	14,280
Reserves and allowances	148			172
Accrued expenses	73			79
Charitable contributions	190			184
Stock-based compensation	846			543
Fixed assets	330			229
Texas margin tax temporary credit	246			253
Total deferred tax assets	12,218			15,740
Valuation allowance	(11,844		)	(15,099		)
Net deferred tax assets	$	374		$	641

Deferred tax liabilities:
481(a) adjustment	2			3
Goodwill	309			135
Intangible amortization	372			645
Total deferred tax liabilities	$	683		$	783

Net deferred tax liability	$	(309	)	$	(142	)

The ending balances of the deferred tax assets have been fully reserved, reflecting the uncertainties as to realizability evidenced by the Company’s historical net losses. The change in valuation allowance for the year ended December 31, 2015 is a decrease of $3,255,000.

We and our subsidiary file federal and state tax returns on a consolidated basis. During 2013, we determined that an “ownership change” had occurred in 2013 (as defined under Section 382 of the Internal Revenue Code of 1986, as amended) which places an annual limitation on the utilization of the net operating loss (“NOL”) carryforwards accumulated before the ownership change. As a result of this annual limitation and the limited carryforward life of the accumulated NOLs, we determined that the ownership change resulted in the permanent loss of approximately $1.9 million of tax benefit associated with the NOL carryforwards. If additional ownership changes occur in the future, the use of the net operating loss carryforwards could be subject to further limitation. At December 31, 2014 we had federal net operating loss carryforwards of $37,393,000 available to offset future federal taxable income which expire in various amounts from 2017 through 2034. At December 31, 2015, we had federal net operating loss carryforwards of $27,417,000 available to offset future federal taxable income which expire in various amounts from 2017 through 2035. The Company also has various state net operating loss carryforwards. The determination of the state net operating loss carryforwards is dependent upon apportionment percentages and state laws that can change from year to year and impact the amount of such carryforwards.

There were no significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return, in accordance with ASC Topic 740 “Income Taxes” (“ASC 740”), which clarifies the accounting for uncertainty in income taxes recognized in the financial statements, that have been recorded on the Company’s consolidated financial statements for the years ended December 31, 2015 and 2014. The Company does not anticipate a material change to unrecognized tax benefits in the next twelve months.

Additionally, ASC 740 provides guidance on the recognition of interest and penalties related to income taxes. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the years ended December 31, 2015 and 2014.

The federal and state tax returns for the years ending December 31, 2014, 2013 and 2012 are currently open and the tax return for the year ended December 31, 2015 will be filed by September 2016.