The Company recorded the following income tax expense for the years ended:

 

		Year ended December 3 0 , 2018				Year ended December 31, 2017				Year ended January 1, 2017
Current:
Federal/State		$	102			$	18			$	(63	)
Foreign			650				621				224
			752				639				161
Deferred:
Federal			—				—				—
Foreign			(75	)			(79	)			126
			(75	)			(79	)			126
Income tax expense		$	677			$	560			$	287

 

The overall income tax expense as recorded in the consolidated statements of operations varied from the tax expense calculated using U.S. federal and state income tax rates as follows for the years ended:

 

		Year ended December 30, 2018				Year ended December 31, 2017				Year ended January 1, 2017
Federal income tax expense (recovery)		$	48			$	(2,550	)		$	20
State income tax expense (recovery), net of federal tax benefit			24				26				(62	)
Change in income tax rates due to tax reform			—				7,944				—
Loss (income) of foreign subsidiaries taxed at different rates			586				333				(161	)
Change in valuation allowance			(61	)			(6,146	)			764
Foreign tax credit			869				302				—
Reassessment of losses by tax authority			—				—				(1,675	)
Deemed income inclusion of foreign subsidiary			170				79				800
Expiry of operating loss carry forwards			226				441				439
Permanent and other differences			(1,185	)			131				164
Income tax expense		$	677			$	560			$	287

 

       Income (loss) before income taxes consisted of the following for the years ended:

 

		Year ended December 30, 2018				Year ended December 31, 2017				Year ended January 1, 2017
Domestic (U.S.)		$	1,569			$	(6,089	)		$	(3,710	)
Foreign (Non U.S.)			(1,340	)			(1,196	)			3,765
		$	229			$	(7,285	)		$	55

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s deferred income tax liabilities and assets are comprised of the following at:

 

		December 30, 2018				December 31, 2017
Deferred income tax assets:
Net operating loss carryforwards		$	20,451			$	18,425
Interest deduction carry forwards			1,568				—
Capital loss carryforwards			3,563				3,563
Tax credit carryforwards			4,911				3,104
Property, plant and equipment and other assets			(5,089	)			1,529
Reserves, allowances and accruals			2,056				—
Other			1,145				1,441
			28,605				28,062
Valuation allowance			(28,225	)			(27,757	)
Net deferred income tax assets		$	380			$	305

 

 

At the Company had total net operating loss (“NOL”) carry forwards of of which and pertains to loss carry forwards from U.S., Canadian and Asian jurisdictions respectively. Net operating loss carryforwards of will expire between and will expire between and will expire in will expire between and will expire between and and the remainder of million is available for indefinite carryforward.

 

Prior to its acquisition by the Company, MC had NOL carryforwards of   Pursuant to Section of the Internal Revenue Code, MC's "ownership change", within the meaning of this Section, results in limits on the Company's ability to utilize these losses for years following the "ownership change". While management estimates that annual utilization is limited to management believes that sufficient losses are otherwise available, such that there is little, if any, adverse tax consequence of this limitation.

 

At and the Company had gross unrecognized tax benefits associated with uncertain tax positions. During the Company recognized tax benefits of associated with uncertain tax positions which resulted in a favorable impact on the Company’s effective tax rate.

 

Whether or the recapitalization transactions undertaken in result in an ownership change for purposes of Section  of the Internal Revenue Code (“Section ), which imposes a limitation on a corporation’s use of NOL carry forwards following an “ownership change,” depends upon whether the exchangeable shares of SMTC Canada are treated as shares of the Company under U.S. tax principles. The Company has concluded that the recapitalization transactions did result in an ownership change and as such the use of the NOL carry forwards has been limited.

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than that some portion or all of its deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management considers the scheduled reversal of deferred tax liabilities, change of control limitations, projected future taxable income and tax planning strategies in making this assessment. Guidance under ASC Income Taxes, (“ASC ) states that forming a conclusion that a valuation allowance is needed is difficult when there is negative evidence, such as cumulative losses in recent years in the jurisdictions to which the deferred tax assets relate. In management has concluded that a full valuation allowance continues to be recorded against the deferred tax assets associated with the U.S, Asian and Canadian jurisdictions as those assets are likely to be realized.

 

On the Tax Cuts and Jobs Act (“TCJA”) was enacted, which included a broad range of tax reform proposals, with many provisions significantly differing from current U.S. tax law. Management has considered the impact of these provisions, including a decrease in the federal corporate income tax rate, from to for years beginning after substantially reducing the value of the Company's deferred tax assets. The Company has recorded a corresponding reduction to its deferred tax assets of as at The reduction in the Company's deferred tax assets is fully offset by a corresponding reduction to the valuation allowance.