Income Taxes	9 Months Ended
Sep. 30, 2015
Income Taxes.
Income Taxes	7. Income Taxes Under Internal Revenue Code (IRC) Section 382, the use of loss carryforwards may be limited if a change in ownership of a company occurs. If it is determined that, due to transactions involving the Company’s shares owned by its 5 percent or greater shareholders, a change of ownership has occurred under the provisions of IRC Section 382, the Company’s federal and state net operating loss carryforwards could be subject to significant IRC Section 382 limitations. Based upon recent IRC Section 382 studies, Section 382 ownership changes occurred that resulted in all but $59 million of the Company’s federal and state net operating loss carryforwards generated through September 30, 2015 to be subject to IRC Section 382 limitations. Of the net operating loss carryforwards subject to IRC Section 382 limitations, $13 million will not expire prior to utilization and are reflected in the Company’s gross deferred tax asset at September 30, 2015. The ownership changes also resulted in net unrealized built in losses per IRS Notice 2003-65 which should result in recognized built in losses during the five year recognition period. These recognized built in losses will translate into unfavorable book to tax add backs in the Company’s 2015 to 2018 U.S. corporate income tax returns of approximately $16.0 million that resulted in a gross deferred tax liability of $6.1 million at September 30, 2015 with a corresponding reduction to the valuation allowance. This gross deferred tax liability will offset certain existing gross deferred tax assets (i.e. capitalized research expense). This has no impact on the Company’s current financial position, results of operations, or cash flows because of the full valuation allowance. The Company’s remaining deferred tax assets have been offset by a full valuation allowance because it is more likely than not that the tax benefits of the net operating loss carryforwards and other tax assets may not be realized. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company had $0.4 million of interest and penalties accrued at September 30, 2015 and December 31, 2014, respectively.

7. Income Taxes

Under Internal Revenue Code (IRC) Section 382, the use of loss carryforwards may be limited if a change in ownership of a company occurs. If it is determined that, due to transactions involving the Company’s shares owned by its 5 percent or greater shareholders, a change of ownership has occurred under the provisions of IRC Section 382, the Company’s federal and state net operating loss carryforwards could be subject to significant IRC Section 382 limitations.

Based upon recent IRC Section 382 studies, Section 382 ownership changes occurred that resulted in all but $59 million of the Company’s federal and state net operating loss carryforwards generated through September 30, 2015 to be subject to IRC Section 382 limitations. Of the net operating loss carryforwards subject to IRC Section 382 limitations, $13 million will not expire prior to utilization and are reflected in the Company’s gross deferred tax asset at September 30, 2015.

The ownership changes also resulted in net unrealized built in losses per IRS Notice 2003-65 which should result in recognized built in losses during the five year recognition period. These recognized built in losses will translate into unfavorable book to tax add backs in the Company’s 2015 to 2018 U.S. corporate income tax returns of approximately $16.0 million that resulted in a gross deferred tax liability of $6.1 million at September 30, 2015 with a corresponding reduction to the valuation allowance. This gross deferred tax liability will offset certain existing gross deferred tax assets (i.e. capitalized research expense). This has no impact on the Company’s current financial position, results of operations, or cash flows because of the full valuation allowance.

The Company’s remaining deferred tax assets have been offset by a full valuation allowance because it is more likely than not that the tax benefits of the net operating loss carryforwards and other tax assets may not be realized.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company had $0.4 million of interest and penalties accrued at September 30, 2015 and December 31, 2014, respectively.