Income (loss) before income taxes consisted of the following for the periods indicated:

	Year Ended January 31,
	2020			2019			2018
	(in thousands)
U.S. operations	$	845		$	1,381		$	2,683
Non-U.S. operations		(42,473	)		(35,933	)		23,046
Income (loss) before income taxes	$	(41,628	)	$	(34,552	)	$	25,729

Income tax provision (benefit) consisted of the following for the periods indicated:

	Year Ended January 31,
	2020			2019			2018
	(in thousands)
Current:
U.S. federal tax	$	1,440		$	1,290		$	3,321
U.S. state taxes		3			2			4
Non-U.S. foreign taxes		1,540			1,561			1,435
		2,983			2,853			4,760
Deferred:
U.S. federal tax		182			(7,077	)		2,185
U.S. state taxes		—			—			—
Non-U.S. foreign taxes		(1	)		119			(68	)
		181			(6,958	)		2,117
Provision (benefit) for income taxes	$	3,164		$	(4,105	)	$	6,877

The Company consists of a Cayman Islands parent company with various foreign and U.S. Subsidiaries. Moreover, effective from December 31, 2019, the Company has structured its activities to comply with the International Tax Co-Operation (Economic Substance) Law, 2018 in the Cayman Islands. As part of the new structure, the Company is the general partner of a Canadian limited partnership, the ultimate beneficial owner, and is allocated all of the earnings of the partnership. The primary jurisdiction where our foreign earnings are derived is the Cayman Islands, where the Company is domiciled. Under the current laws of the Cayman Islands, the Company is not subject to tax on its income. For purposes of the reconciliation between the provision (benefit) for income taxes at the statutory rate and the effective tax rate, a notional U.S. 21.0%, 21.0% and 33.8% rates are applied to pretax income (loss) as a result of the following for the periods indicated, respectively:

	Year Ended January 31,
	2020			2019			2018
	(in thousands)
Provision at U.S. notional statutory rate	$	(8,742	)	$	(7,256	)	$	8,699
U.S. state taxes		3			2			2
Non-U.S. foreign tax differential		10,458			9,226			(6,424	)
Stock-based compensation		4,172			4,715			4,645
U.S. R&D credit		(3,109	)		(2,770	)		(2,408	)
Valuation allowance		—			(7,990	)		(1	)
Change in tax rate		—			—			2,252
Other		382			(32	)		112
Provision (benefit) for income taxes	$	3,164		$	(4,105	)	$	6,877

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law in the United States. The tax legislation contains several provisions that impacted the Company, including the reduction of the corporate income tax rate from 35% to 21%, acceleration of business asset expensing, and a reduction in the amount of executive pay that may qualify as a tax deduction, among others. The income tax benefit recorded for the fiscal year ended January 31, 2019 includes the impact of the Tax Act.

Temporary differences that gave rise to significant portions of the Company’s deferred tax assets and liabilities at January 31, 2020 and 2019 were as follows:

	As of January 31,
	2020			2019
	(in thousands)
Deferred tax assets:
Federal and state credits	$	21,275		$	19,426
Expenses not currently deductible		593			575
Operating lease liabilities		2,023			—
Stock-based compensation		3,203			3,202
Foreign deferred		132			122
Gross deferred tax assets		27,226			23,325
Valuation allowance		(14,670	)		(12,526	)
Total deferred tax assets	$	12,556		$	10,799
Deferred tax liabilities
Property and equipment		(1,469	)		(1,505	)
Operating lease assets		(1,974	)		—
Net deferred tax assets	$	9,113		$	9,294

							Deductions
					Additions		Charged to
	Balance at		Additional		Charged to		Expenses			Balance at
	Beginning of		Charged to		Other		or Other			End of
	Period		Expenses		Account		Accounts			Period
	(in thousands)
Tax Valuation Allowance
Year ended January 31, 2020	$	12,526		2,144		—		—		$	14,670
Year ended January 31, 2019	$	18,538		1,978		—		(7,990	)	$	12,526
Year ended January 31, 2018	$	15,061		3,477		—		—		$	18,538

The Company conducts its business in several countries and regions and is subject to taxation in those jurisdictions. The Company is incorporated in the Cayman Islands with foreign affiliates in the U.S., Canada, China, Taiwan, Italy and other foreign countries and regions. As such, the Company’s worldwide operating income is subject to varying tax rates and its effective tax rate is highly dependent upon the geographic distribution of its earnings or losses and the tax laws and regulations in each geographical region. Consequently, the Company has experienced lower effective tax rates as a substantial amount of its operations are conducted in lower-tax jurisdictions. If the Company’s operational structure was to change in such a manner that would increase the amount of operating income subject to taxation in higher-tax jurisdictions, or if the Company was to commence operations in jurisdictions assessing relatively higher tax rates, its effective tax rate could fluctuate significantly on a quarterly basis and/or be adversely affected. Dividend distributions received from the Company’s U.S. subsidiary and certain other foreign subsidiaries may be subject to local country withholding taxes when, and if, distributed. Deferred tax liabilities have not been recorded on unremitted earnings of certain subsidiaries because management’s intent is to indefinitely reinvest any undistributed earnings in those subsidiaries. If dividend distributions from those subsidiaries were to occur, the liability as of January 31, 2020 would be $11.9 million. Cumulative undistributed earnings of foreign subsidiaries for which no deferred taxes have been provided approximated $78.5 million at January 31, 2020.

As of January 31, 2020 and 2019, the Company had deferred tax assets (net of deferred tax liabilities) before valuation allowance, of $23.8 million and $21.8 million, respectively. The Company assesses whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence, using a “more likely than not” standard. In the fourth quarter of fiscal year 2019, the Company determined that, based on its cumulative profits before taxes and estimates of future forecasts of continued profitability in the United States, sufficient positive evidence existed to conclude that the valuation allowance on the U.S. federal research and development credit carryforwards was no longer needed. Accordingly, the Company realized approximately $8.0 million in deferred tax assets and a corresponding decrease in income tax expense related to the release of the valuation allowance for the U.S. federal research and development credit carryforwards.

The Company has $81.3 million and $15.7 million of federal and California net operating loss carryforwards as of January 31, 2020. The federal and California net operating loss carryforwards begin to expire in fiscal year 2035, if not utilized. For financial statement purposes these carry forwards are offset by uncertain tax positions.

The Company also has Federal and California state research and development credit carryforwards of approximately $20.4 million and $23.2million, respectively, at January 31, 2020. The Federal credits begin to expire in fiscal year 2033. The California credits can be carried forward indefinitely.

The Company reports its U.S. state deferred tax assets and related valuation allowance, net of the U.S federal tax rate of 21%. As of January 31, 2020, the Company has recorded a valuation allowance of $14.7 million against all of its U.S. state deferred tax assets due to uncertainty regarding the future utilization of these deferred tax assets.

Utilization of the research credit carryforwards may be subject to an annual limitation due to the ownership percentage change limitations as defined by the U.S. Internal Revenue Code Section 382, as amended, and similar state provisions. The annual limitation may result in the expiration of the U.S. Federal and state research credit carryforwards before utilization. The Company does not expect any tax credit carryforwards to expire as a result of a Section 382 limitation.

The Company applies the provisions of FASB’s guidance on accounting for uncertainty in income taxes. As of January 31, 2020, the Company had approximately $42.7 million in unrecognized tax benefits, $36.2 million of which would affect the Company’s effective tax rate if recognized. The remainder of the unrecognized tax benefits would not affect the effective tax rate due to the full valuation recorded for state deferred tax assets. The following table sets forth a reconciliation of the beginning and ending amount of unrecognized tax benefits:

	Year Ended January 31,
	2020			2019			2018
	(in thousands)
Beginning balance:	$	37,531		$	34,117		$	37,977
Additions based on tax positions related to the current year		4,964			3,922			7,892
Additions for tax positions of prior years		252			109			28
Reductions for tax positions in prior years		—			(552	)		(11,313	)
Settlements for prior periods		—			—			—
Lapse of applicable statute of limitations		(52	)		(65	)		(467	)
Ending balance:	$	42,695		$	37,531		$	34,117

The Company classified $7.5 million and $6.3 million of income tax liabilities as other long term liabilities as of January 31, 2020 and 2019, respectively, because payment of cash or settlement is not anticipated within one year from the balance sheet date.

The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. The Company recorded $358,000, $263,000 and $37,000 of interest expense and penalties related to uncertain tax positions for the fiscal years ended January 31, 2020, 2019 and 2018, respectively. The Company recorded noncurrent liabilities of $760,000 and $403,000 related to interest and penalties for uncertain tax positions at January 31, 2020 and 2019, respectively.

The primary jurisdiction where our foreign earnings are derived is the Cayman Islands, where the Company is domiciled. The Company files income tax returns in the U.S. federal jurisdiction as well as many U.S. state and foreign jurisdictions. The tax years 2013 to 2019 remain open to examination by U.S. federal tax authorities. The tax years 2009 to 2019 remain open to examination by U.S. state tax authorities. The tax years 2014 to 2019 remain open to examination by foreign tax authorities. Fiscal years outside of the normal statute of limitations remain open to audit by tax authorities due to tax attributes generated in those earlier years, which have been carried forward and may be audited in subsequent years when utilized.

The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs. Although timing of the resolution and/or closure of audits is highly uncertain, the Company does not believe it is reasonably possible that its unrecognized tax benefits would materially change in the next 12 months.

As of January 31, 2020, the Company’s long-term income taxes payable, including estimated interest and penalties, was approximately $8.3 million. The Company was unable to make a reasonably reliable estimate of the timing of payments in individual years due to uncertainties in the timing of tax audits, if any, or their outcomes.

On July 27, 2015, in Altera Corp. v. Commissioner, the United States Tax Court issued an opinion invalidating the 2003 final Treasury regulations that requires participants in a qualified cost-sharing arrangement to share stock-based compensation. At this time, the U.S. Department of the Treasury has not withdrawn the requirement to include stock-based compensation in intercompany cost-sharing arrangements from its regulations. In February 2016, the IRS appealed the ruling to the United States Court of Appeals for the Ninth Circuit. On June 7, 2019, a three-judge panel from the Ninth Circuit issued an opinion (“Altera Ninth Circuit Panel Opinion”) that reversed the Tax Court Decision. On July 22, 2019, the taxpayer requested a rehearing before the full Ninth Circuit but was denied on November 12, 2019. On February 10, 2020, Altera Corp. filed a petition to appeal the decision with the Supreme Court of the United States. Due to the uncertainty related to the final resolution of this issue, the Company has not recorded tax benefits in its consolidated statements of operations for the fiscal year ended January 31, 2020. The Company will continue to monitor ongoing developments and potential impacts to its consolidated financial statements.