Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes

Income Taxes

20. Income Taxes

The components of loss before income taxes and the income tax (expense) benefit for the years ended December 31, 2022, 2021, and 2020, by jurisdiction, are as follows (in thousands):

	2022						2021						2020
	U.S.		Foreign		Total		U.S.		Foreign		Total		U.S.		Foreign		Total
Loss before income taxes	$	(697,342)	$	(25,827)	$	(723,169)	$	(466,825)	$	(9,337)	$	(476,162)	$	(624,302)	$	(2,698)	$	(627,000)
Income tax (expense) benefit		868		(1,707)		(839)		16,540		(343)		16,197		30,845		—		30,845
Net loss attributable to the Company	$	(696,474)	$	(27,534)	$	(724,008)	$	(450,285)	$	(9,680)	$	(459,965)	$	(593,457)	$	(2,698)	$	(596,155)

The significant components of current and deferred income tax expense (benefit) for the years ended December 31, 2022, 2021, and 2020, by jurisdiction, are as follows (in thousands):

	2022						2021						2020
	U.S.		Foreign		Total		U.S.		Foreign		Total		U.S.		Foreign		Total
Current income tax (benefit) expense	$	—	$	668	$	668	$	—	$	—	$	—	$	—	$	—	$	—
Deferred tax (benefit) expense		(42,705)		6,968		(35,737)		(51,999)		1,064		(50,935)		(31,408)		(67)		(31,475)
Net operating loss carryforward generated		(92,030)		4,332		(87,698)		(105,498)		(2,038)		(107,536)		(51,849)		(438)		(52,287)
Valuation allowance increase (decrease)		133,867		(10,261)		123,606		140,957		1,317		142,274		52,412		505		52,917
Expense (benefit) for income taxes	$	(868)		1,707	$	839	$	(16,540)	$	343	$	(16,197)	$	(30,845)	$	—	$	(30,845)

The Company’s effective income tax rate differed from the federal statutory rate as follows:

	2022		2021		2020
U.S. Federal statutory tax rate	(21.0)	%	(21.0)	%	(21.0)	%
Deferred state taxes	0.0	%	(0.6)	%	(2.3)	%
Common stock warrant liability	0.0	%	(6.0)	%	13.4	%
Section 162M Disallowance	1.9	%	1.1	%	0.0	%
Equity Compensation	(0.7)	%	(4.3)	%	0.0	%
Provision to return and deferred tax asset adjustments	4.6	%	(1.3)	%	0.0	%
Change in U.S. Federal/Foreign statutory tax rate	0.0	%	0.3	%	0.0	%
Other, net	0.6	%	(1.5)	%	(3.5)	%
Change in valuation allowance	14.8	%	29.9	%	8.4	%
	0.1	%	(3.4)	%	(5.0)	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of certain assets and liabilities for financial reporting and the amounts used for income tax purposes. The Company has recorded a net deferred tax liability in other non-current liabilities, at December 31, 2022 and 2021 of approximately $11.5 million

and $5.0 million, respectively. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows (in thousands):

	U.S.				Foreign				Total
	2022		2021		2022		2021		2022		2021
Deferred revenue		33,172		24,514		137		146		33,309		24,660
Interest expense		31,368		29,095		—		—		31,368		29,095
Other reserves and accruals		26,591		23,398		287		7,332		26,878		30,730
Tax credit carryforwards		14,949		8,960		—		1,289		14,949		10,249
Amortization of stock-based compensation		30,217		13,904		—		—		30,217		13,904
Non-compensatory warrants		6,268		4,115		—		—		6,268		4,115
Capitalized research & development expenditures		60,588		37,912		—		4,613		60,588		42,525
Right of use liability (operating leases)		32,616		6,118		259		485		32,875		6,603
Net operating loss carryforwards		297,790		205,760		7,720		12,052		305,510		217,812
Total deferred tax asset		533,559		353,776		8,403		25,917		541,962		379,693
Valuation allowance		(429,291)		(295,424)		(8,183)		(18,444)		(437,474)		(313,868)
Net deferred tax assets	$	104,268	$	58,352	$	220	$	7,473	$	104,488	$	65,825
Intangible assets		(29,731)		(23,244)		(9,938)		(11,098)		(39,669)		(34,342)
Convertible debt		(26,989)		(27,346)		—		—		(26,989)		(27,346)
Right of use asset (operating leases)		(40,194)		(247)		(260)		(485)		(40,454)		(732)
Property, plant and equipment and right of use assets		(7,383)		(8,489)		(1,500)		—		(8,883)		(8,489)
Deferred tax liability	$	(104,297)	$	(59,326)	$	(11,699)	$	(11,583)	$	(115,996)	$	(70,909)
Net	$	(29)	$	(974)	$	(11,479)	$	(4,110)	$	(11,508)	$	(5,084)

The Company has recorded a valuation allowance, as a result of uncertainties related to the realization of its net deferred tax asset, at December 31, 2022 and 2021 of approximately $437.5 million and $313.9 million, respectively. A reconciliation of the current year change in valuation allowance is as follows (in thousands):

	U.S.		Foreign		Total
Increase (decrease) in valuation allowance for current year increase in net operating losses	$	119,784		(5,924)	$	113,860
Increase (decrease) in valuation allowance for current year net increase in deferred tax assets other than net operating losses		22,081		(12,265)		9,816
Increase (decrease) in valuation allowance due to change in tax rates		(7,998)		7,928		(70)
Net increase (decrease) in valuation allowance	$	133,867	$	(10,261)	$	123,606

With the exception of the Company’s Netherlands subsidiary, all deferred tax assets are 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 deferred tax assets will not be realized.

Under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), 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 stockholders a change of ownership has occurred under the provisions of Section 382 of the Code, the Company's federal and state NOL carryforwards could be subject to significant Section 382 limitations.

The Company's deferred tax assets include $1.4 billion of U.S. net operating loss carryforwards. The NOL carryforwards available at December 31, 2022, include $1.2 billion of NOL that was generated in 2018 through 2022, that do not expire. The remainder, if unused, will expire at various dates from 2034 through 2037. Based on analysis of stock transactions, an ownership change as defined under Section 382 of the Code occurred in 2013, which imposes a $13.5

million limit on the utilization of pre-change losses that can be used to offset taxable income in future years. The pre-change NOL carryforwards will expire, if unused, at various dates from 2021 through 2033. The Company continuously analyzes stock transactions and has determined that no ownership changes have occurred since 2013 that would further limit the utilization of NOLs. Therefore, NOLs of $1.4 billion incurred in post-change years are not subject to limitation.

Approximately $14.9 million of research credit carryforwards generated after the most recent IRC Section 382 ownership change are included in the Company's deferred tax assets. Due to limitations under IRC Section 382, research credit carryforwards existing prior to the most recent IRC Section 382 ownership change will not be used and are not reflected in the Company's gross deferred tax asset at December 31, 2022. The remaining credit carryforwards will expire during the periods 2033 through 2042.

At December 31, 2022, the Company has unused Canadian net operating loss carryforwards of approximately $1.3 million. The net operating loss carryforwards if unused will expire at various dates between 2040 through 2043. At December 31, 2022, the Company has no remaining Scientific Research and Experimental Development (“SR&ED”) expenditures or ITC credit carryforwards.

At December 31, 2022, the Company has unused French net operating loss carryforwards of approximately $27.3 million. The net operating loss may carryforward indefinitely or until the Company changes its activity.

At December 31, 2022, the Company no longer has Netherlands net operating loss carryforwards. As the carryforward amount of $2.9 million as of December 31, 2021 was utilized in the current year. 

As of December 31, 2022, the Company has no un-repatriated foreign earnings or unrecognized tax benefits.

The Inflation Reduction Act of 2022 (IRA) was signed into law on August 16, 2022. Key provisions under the IRA include a 15% corporate alternative minimum tax imposed on certain large corporations and the extension and expansion of clean energy tax incentives. The 15% corporate alternative minimum tax is not expected to affect the Company in the near future. The Company is in the process of evaluating the impact of the clean energy tax incentives on its businesses and is awaiting U.S. Department of the Treasury and Internal Revenue Service guidance.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions.  In the normal course of business, the Company is subject to examination by taxing authorities. Open tax years in the U.S. range from 2019 and forward. Open tax years in the foreign jurisdictions range from 2012 and forward.  However, upon examination in subsequent years, if net operating losses carryforwards and tax credit carryforwards are utilized, the US and foreign jurisdictions can reduce net operating loss carryforwards and tax credit carryforwards utilized in the year being examined if they do not agree with the carryforward amount. As of December 31, 2022, the Company was not under audit in the U.S. or non-U.S. taxing jurisdictions.

The Tax Cuts and Jobs Act of 2017 requires taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code ("IRC") Section 174. The requirement was effective for the Company beginning after December 31, 2021. We recorded a deferred tax asset of approximately $19.0 million due to Section 174 capitalization. We note that the Company is currently in a full valuation allowance as it relates to the U.S. taxing jurisdiction as a result there is no impact to cash taxes payable.

The Company has not changed its overall conclusion with respect to the need for a valuation allowance against its net deferred tax assets, which remain fully reserved, with the exception of $20.0 million of DTAs recorded in the Netherlands, which do not require a reserve as the Netherlands entity has approximately $31.5 million of DTLs that provide a sufficient source of income to support realization of its DTAs.