9. Income Taxes

Our provision for income taxes is comprised of the following:

Variations from the federal statutory rate are as follows:

Deferred income taxes reflect 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 components of the net accumulated deferred income tax assets (liabilities) as of December 31, 2017 and 2016 are as follows:

The source of income (loss) before income taxes are as follows:

Periodically, we perform assessments of the realization of our net deferred tax assets considering all available evidence, both positive and negative. During 2017, we determined that a $5.9 million valuation allowance against our deferred tax assets was necessary due to the cumulative loss incurred over a three-year period, excluding the sale of the Gaiam Brand segment in 2016.  We released a full valuation allowance in 2016 on these deferred tax assets and in 2017 for AMT tax credits as recent federal tax law has recharacterized them as fully refundable by 2021. We have federal and state net operating loss carryforwards of approximately $26.7 million and $1.3 million, respectively, which expire after 2037.

We realized $0.1 million and $0.8 million in tax benefits recorded to additional paid-in capital because of the exercise of stock options during 2017 and 2016, respectively. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. We measure the tax benefits recognized in the consolidated financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax law and regulations change over time and may result in changes to our subjective assumptions and judgments which can materially affect amounts recognized in our consolidated balance sheets and consolidated statements of operations.

The result of our assessment of our uncertain tax positions did not have a material impact on our consolidated financial statements. Our federal and state tax returns for all years after 2012 are subject to future examination by tax authorities for all our tax jurisdictions. We recognize interest and penalties related to income tax matters in interest and other income (expense) and corporate, general and administrative expenses, respectively.