Deferred tax (liabilities) assets are comprised of the following at:
The Company has Federal tax credit carryforwards of $5.4 million that expire in various tax years from 2028 to 2038. The Company has a Federal operating loss carryforward of $24.5 million expiring from 2029 through 2037 and a Federal operating loss carryforward of $17.9 million with an unlimited carryforward period. The Company also has state tax credit carryforwards of $0.3 million and state operating loss carryforwards of $43.3 million, which vary by jurisdiction and expire in various tax years through 2039.
In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.
As a result of this analysis and based on the current year’s taxable income, and utilization of certain carryforwards management determined an increase in the valuation allowance in the current year to be appropriate.
In calculating the valuation allowance, the Company was not permitted to use its existing deferred tax liabilities related to its indefinite-lived intangible assets (i.e. “naked credit deferred tax liabilities”) as a source of taxable income to support the realization of its existing finite-lived deferred tax assets.
Due to the Tax Act, U.S. net operating losses ("NOLs") arising in tax years ending after December 31, 2017 will no longer be subject to the limited 20-year carryforward period. Under the new law, these NOLs carry forward indefinitely, resulting in the creation of indefinite-lived deferred tax assets. Consequently, as the Company schedules its deferred taxes and considers the ability to realize its deferred tax assets in future periods, it needs to consider how existing deferred tax assets, other than historical NOLs, will reverse.
If the reversal is expected to generate an indefinite carryforward NOL under the new law, this may impact the valuation allowance assessment. The indefinite carryforward period for NOLs also means that its deferred tax liabilities related to indefinite-lived intangibles, commonly referred to as “naked credits,” can be considered as support for realization. The adjustment for the 2019 “naked credit” resulted in a $0.01 million deferred tax liability.
In 2019, it was determined that the foreign tax credit carryforward of the Company would not be realizable. The reduction of the foreign tax credit carryforward resulted in a decrease in the valuation allowance for those credits. Therefore, there is no net income tax provision in 2019 related to the reduction in the foreign tax credit carryforward. A valuation allowance is required to the extent it is more likely than not that the future benefit associated with certain Federal and state tax loss carryforwards will not be realized.
The current year income tax provision includes a reduction of the Company’s valuation allowance due to the establishment of a deferred tax liability in connection with the issuance of convertible debt. The establishment of that deferred tax liability created “future taxable income” for the utilization of existing deferred tax assets of the Company, resulting in the $4 million reduction of the Company’s valuation allowance.
The Company records the benefits relating to uncertain tax positions only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement.
At December 31, 2019, the Company’s reserve for uncertain tax positions is not material and we believe we have adequately provided for its tax-related liabilities. The Company is no longer subject to United States federal income tax examinations for years before 2014.
Table:
 | December 31, | 
 | (in thousands) | 
 | 2019 | 2018
Deferred tax (liabilities) assets: |  | 
Subordinated debt | $(3,659) | $—
Indefinite lived intangibles | (64) | —
Right of use assets | (756) | —
Software development costs | (1,219) | (1,954)
Acquired intangible assets | (446) | (676)
Depreciation on property, plant and equipment | (352) | —
Gross deferred tax liabilities | (6,496) | (2,630)
Allowances for bad debts and inventory | 3,013 | 2,785
Capitalized inventory costs | 141 | 116
Intangible assets | 117 | 420
Employee benefit accruals | 2,427 | 1,742
Interest Limitation | 1,248 | —
Lease liabilities | 772 | —
Federal net operating loss carryforward | 8,563 | 6,512
State net operating loss carryforward | 2,317 | 2,112
Tax credit carryforwards | 5,777 | 6,176
Depreciation on property, plant and equipment | — | 373
Other | 912 | 722
Gross deferred tax assets | 25,287 | 20,958
Less valuation allowance | (18,855) | (18,328)
Net deferred tax liabilities | $(64) | $—


Question: When will the Federal tax credit carryforwards of $24.5 million expire?
Answer: from 2029 through 2037