6. Income Taxes

The components of the Company’s net deferred tax assets at July 31, 2015 and 2014 are as follows (in thousands):


	July 31,
	2015			2014
Deferred tax assets:
Net operating loss carryforwards	$	298,924		$	298,426
Credit carryforwards		21,301			21,301
Restructuring and related accruals		3,502			3,502
Capital loss carryforwards		672			672
Depreciation		971			971
Other, net		695			695

Total net deferred tax assets		326,065			325,567
Valuation allowance		(326,065	)		(325,567	)

Net deferred tax assets	$	—		$	—

The Company is currently open to audit under statutes of limitation by the Internal Revenue Service, various foreign jurisdictions, and state jurisdictions for the fiscal years ended July 31, 2009 through July 31, 2015. However, limited adjustments can be made to federal and state tax returns in earlier years in order to reduce net operating loss carryforwards.

As of July 31, 2015, the Company had federal and state net operating loss (“NOL”) carryforwards of approximately $857.76 million and $36.2 million, respectively. The federal and state net operating loss carryforwards will expire at various dates through 2034. The Company also has federal and state research and development credit carryforwards of approximately $11.32 million and $9.98 million, respectively, which begin to expire in 2020 and 2016, respectively.

The occurrence of ownership changes, as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), is not controlled by the Company, and could significantly limit the amount of net operating loss carryforwards and research and development credits that can be utilized annually to offset future taxable income. The Company completed an updated Section 382 study through July 31, 2011 and the results of this study showed that no ownership change within the meaning of the Code had occurred through July 31, 2011 that would limit the annual utilization of available tax attributes. The Company has not, however, conducted a Section 382 study for any periods after July 31, 2011 and, accordingly, the Company cannot provide any assurance that an ownership change within the meaning of the Code has not occurred since that date.

The Company has evaluated the positive and negative evidence bearing upon the realization of its deferred tax assets and has established a valuation allowance of $326.06 million and $325.56 million as of July 31, 2015 and July 31, 2014, respectively, for such assets, which are comprised principally of net operating loss carryforwards, research and development credits and stock based compensation.

Included in the net operating loss carryforwards are stock option deductions of approximately $125.0 million. The benefits of these stock option deductions approximate $47.8 million. As of July 31, 2015, the Company had net operating loss carryforwards of approximately $7.1 million related to the exercise of stock options subsequent to the adoption of fair value accounting. This amount represents the excess benefit and has not been included in the gross deferred tax asset reflected for net operating losses.

As of July 31, 2015, the total amount of unrecognized tax benefit is $1.59 million. If recognized, the entire amount would impact the Company’s effective tax rate.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):


	2015			2014
Beginning balance	$	1,786		$	1,742
Increase for current year		82			83
Reductions related to expiration of statute of limitations		(281	)		(39	)

Ending balance	$	1,587		$	1,786

As of July 31, 2015 and July 31, 2014, the total amount of accrued interest and penalties related to uncertain tax positions is $0.6 million. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for federal, international and state income taxes. This liability is subject to change, perhaps materially. It is reasonably possible this liability will be reduced between $0.5 million and $0.7 million in fiscal year 2016.