10. Income Taxes

We had no income tax expense or benefit for the years ended December 31, 2014, 2013 and 2012.

Subject to the limitations described below at December 31, 2014, 2013 and 2012, we had net operating loss carryforwards of approximately $72.1 million, $33.0 million and approximately $14.1 million, respectively, to offset future federal taxable income, which expire beginning in 2031 continuing through 2034. The federal net operating loss carryforwards exclude approximately $5.5 million of deductions related to the exercise of stock options. This amount represents an excess tax benefit and has not been included in the gross deferred tax asset reflected for net operating losses. This amount will be recorded as an increase in additional paid in capital on the consolidated balance sheet once the excess benefits are "realized" in accordance with ASC 718. As of December 31, 2014, 2013 and 2012, we had net operating loss carryforwards of approximately $71.5 million, $32.6 million and approximately $13.9 million, respectively, to offset future state taxable income, which expire beginning in 2031 continuing through 2034. The state net operating loss carryforwards include $5.5 million of deductions related to the exercise of stock options. We also had tax credit carryforwards of approximately $1.9 million, $0.9 million and $0.2 million as of December 31, 2014, 2013 and 2012, respectively, to offset future federal and state income taxes, which expire beginning in 2027 continuing through 2034.

The NOL and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on our value immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years.

We have not, as yet, conducted a study of IRC Section 382. As a full valuation allowance has been provided against our NOL and tax credit carryforwads, and if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance, there would be no impact to the consolidated balance sheet or consolidated statements of operations.

A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows:

	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012
Income tax benefit using U.S. federal statutory rate		34.00	%		34.00	%		34.00	%
State income taxes, net of federal benefit		5.28	%		5.28	%		5.42	%
Research and development tax credits		1.75	%		2.31	%		0.00	%

Permanent items		(0.55	)%		(1.09	)%		(2.78	)%
Foreign differential		(1.59	)%		—%			—%
Other adjustments (state)		(0.03	)%		—%			—%
Change in the valuation allowance		(38.86	)%		(40.50	)%		(36.64	)%

		—	%		—	%		—	%

The principal components of our deferred tax assets are as follows (in thousands):

	2014			2013
Deferred Tax Assets:
Net operating loss carryforwards		26,133			12,939
Tax credit carryforwards		1,689			823
Accrued Expenses		655			190
Stock based compensation		5,591			1,602
Intangibles		2,536			1,954
Other		305			160

Gross deferred tax assets		36,909			17,668
Valuation allowance		(36,909	)		(17,668	)

Net deferred tax assets		—			—

We have evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets. We have considered our history of operating losses and concluded, in accordance with the applicable accounting standards, that it is more likely than not that we may not realize the benefit of our deferred tax assets. Accordingly, our deferred tax assets have been fully reserved at December 31, 2014 and 2013. We reevaluate the positive and negative evidence on a quarterly basis.

The valuation allowance increased approximately $19.2 million during the year ended December 31, 2014, due primarily to the increase in net operating loss carryforwards and tax credits. The valuation allowance increased approximately $11.7 million during the year ended December 31, 2013, due primarily to the increase in the net operating loss carryforwards and tax credits.

We apply ASC 740, Income Taxes. ASC 740 provides guidance on the accounting for uncertainty in income taxes recognized in financial statements. At December 31, 2014 and 2013, we had no unrecognized tax benefits.

We will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2014, 2013 and 2012, we had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in our consolidated statements of operations.

We file income tax returns in the U.S. Federal and Massachusetts jurisdictions. The statute of limitations for assessment by the Internal Revenue Service ("IRS") and state tax authorities is open for tax years ended December 31, 2013, 2012 and 2011. There are currently no federal or state income tax audits in progress.

We have not, as yet, conducted a study of research and development ("R&D") credit carryforwards. Such a study, once undertaken by us, may result in an adjustment to our R&D credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against our R&D credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the balance sheet or statement of operations if an adjustment is required.