At December 31, 2015, the Company had federal, state and local net operating loss carryforwards (NOLs) totaling approximately $19,603,000 expiring through 2029, with a future tax benefit of approximately $6,819,000.  At December 31, 2015 and 2014, $4,958,000 and $4,743,000, respectively, was recorded as deferred tax assets on the Company's consolidated balance sheet.  At each report date, management considers new evidence, both positive and negative, of its view of the future realization of deferred tax assets.  Based upon taxable income for the year ended December 31, 2015, the Company recorded a provision for income taxes of $1,729,000 which included a reduction to its deferred tax assets of $1,636,000.  In addition, at December 31, 2015 based upon additional taxable income to be realized in future years from pending legal proceedings and related license agreements, management determined that there was sufficient positive evidence to conclude that it was more likely than not that additional deferred taxes of approximately $1,851,000 were realizable.  Accordingly, after reducing the deferred tax assets by $1,636,000 based on the effective tax applied against the 2015 taxable net income, this amount was offset by a reduction in its valuation allowance on its deferred tax assets resulting in a deferred net tax benefit of $215,000 recorded on the Company's consolidated statement of operations.  To the extent that the Company earns income in the future, the Company will report income tax expense and such expense attributable to federal income taxes will reduce its deferred tax assets reflected on the consolidated balance sheet.  Management will continue to evaluate the recoverability of the NOL and adjust the deferred net tax assets appropriately.  Utilization of NOL credit carryforwards can be subject to a substantial annual limitation due to ownership change limitations that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions.  The 2014 provision for income taxes includes an approximate $17,000 benefit arising from a reclassification adjustment for a previously unrealized loss on a security classified as available-for-sale and its realized loss in the year ended December 31, 2014.

The principal components of the net deferred tax assets are as follows:

The reconciliation between the taxes as shown and the amount that would be computed by applying the statutory federal income tax rate to the income before income taxes is as follows:

While only the tax returns for the four years ended prior to December 31, 2015 are open for examination for taxes payable for those years, tax authorities could challenge returns (only under certain circumstances) for earlier years to the extent that they generated loss carry forwards that are available for those or future years.