Following are the components of the provision for income taxes for fiscal years ended:

 

		March 31,				March 25,
(in thousands)		2018				2017
Current
Federal		$	—			$	—
State			2				2
			2				2
Deferred
Federal			5,547				(496	)
State			(393	)			(6	)
			5,154				(502	)
Change in liability for uncertain tax positions			2				14
Change in valuation allowance			(5,156	)			488
Provision for income taxes		$	2			$	2

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets are as follows:

 

Fiscal years ended (In thousands)		March 31 , 201 8				March 2 5 , 201 7
Net operating loss carryforwards		$	11,472			$	15,984
Income tax credits			347				323
Inventory reserves and additional costs capitalized			787				1,450
Accrued vacation			40				109
Deferred rent			136				—
Non-qualified stock options and restricted stock			2				5
Other			77				146
Total deferred tax assets			12,861				18,017
Valuation allowance			(12,861	)			(18,017	)
Net deferred tax assets		$	—			$	—

 

On the President signed the Tax Cuts and Jobs Act (“TCJ Act”), following its passage by the United States Congress. The TCJ Act provides for significant changes to the U.S. Internal Revenue Code of as amended, that impact corporate taxation requirements, such as the reduction of the federal tax rate for corporations from to and changes or limitations to certain tax deductions. These changes are generally effective after If the taxable year includes the effective date of any rate changes, taxes should be calculated by applying a blended rate to the taxable income for the year. The Company’s taxable year runs from through therefore a blended corporate rate of will apply to its Tax Year.

 

As a result of the enactment of the TCJ Act, the Company’s deferred tax assets and liabilities were remeasured using the new corporate tax rate, resulting in a million decrease in gross deferred tax assets with a corresponding decrease in the valuation allowance.

 

The following summarizes the difference between the income tax expense and the amount computed by applying the statutory federal income tax rates of and respectively, for the years ended and to income before income tax. The items comprising these differences consisted of the following for the fiscal years ended and

 

Fiscal years ended
(In thousands except percentages)		March 31 , 20 1 8								March 2 5 , 201 7
Statutory federal income tax (benefit)		$	(955	)			31.6	%		$	(525	)			34.0	%
Valuation allowance			(5,156	)			170.1				488				(31.6	)
Effect of reduced corporate tax rates			6,207				(205.3	)			—				—
State income tax, net of federal benefit			(177	)			5.9				(90	)			5.8
Net operating loss expiration			—				—				86				(5.6	)
Non-tax deductible expenses			46				(1.5	)			77				(5.0	)
Tax credits			(4	)			0.1				(40	)			2.6
Liability for uncertain tax positions			—				—				14				(0.9	)
Other			41				(0.9	)			(8	)			0.5
Effective income tax		$	2				—			$	2				(0.2	)%

 

The decrease in valuation allowance from to was

 

As of the Company had pre-tax federal net operating loss carryforwards of and state net operating loss carryforwards of available to reduce future taxable income.  The federal and state net operating loss carryforwards begin to expire from fiscal through and from through respectively.  Utilization of net operating loss carryforwards be subject to annual limitations due to certain ownership change limitations as required by Internal Revenue Code Section   In addition, the TCJ Act imposes new limitations on the utilization of losses incurred in tax years beginning after The federal income tax credits begin to expire from through and state income tax credit carryforwards are carried forward indefinitely.

 

The Company has recorded a valuation allowance to reflect the estimated amount of deferred tax assets, which be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which those temporary differences become deductible. Management considers both positive and negative evidence and tax planning strategies in making this assessment.

 

As of the Company recorded unrecognized tax benefits of related to uncertain tax positions. The unrecognized tax benefit is netted against the non-current deferred tax asset on the consolidated balance sheet. The Company has recorded a liability for any penalties or interest related to the unrecognized tax benefits.

 

The Company files U.S federal and California state tax returns. The Company is generally longer subject to tax examinations for years prior to the fiscal year for federal purposes and fiscal year for California purposes, except in certain limited circumstances. The Company does have a California Franchise Tax Board (“FTB”) audit currently in process. The Company has worked with the FTB to resolve all audit issues and does believe any material taxes or penalties are due. However, as a result of the ongoing examination, the Company eliminated certain income tax credit carryovers. The write-off of these income tax credit carryovers had impact on total income tax expense as the majority had an uncertain tax position reserve with the balance having a full valuation allowance against the deferred tax asset.

 

A reconciliation of the beginning and ending amount of the liability for uncertain tax positions, excluding potential interest and penalties, is as follows:

 

		Fiscal Year s
(In thousands)		2018				2017
Balance as of beginning of year		$	120			$	106
Additions based on current year tax positions			2				14
(Reductions) additions for prior year tax positions			—				—
Balance as of end of year		$	122			$	120

 

The total amount of interest and penalties related to unrecognized tax benefits at is material. The amount of tax benefits that would impact the effective rate, if recognized, is expected to be material. The Company does anticipate any significant changes with respect to unrecognized tax benefits within next () months.