The Company has had no income tax expense due to operating losses incurred for the years ended December 31, 2019 and 2018. The Company has also not recorded any income tax benefits for the net operating losses incurred in each period due to its uncertainty of realizing a benefit from those items. All of the Company’s losses before income taxes were generated in the United States.

A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate for the years ended December 31, 2019 and 2018 is as follows:

	2019			2018
Federal statutory rate		21.0	%		21.0	%
Federal research tax credit		3.5	%		2.5	%
Stock compensation		(2.2	)%		(3.3	)%
Change in valuation allowance		(22.0	)%		(20.3	)%
Other		(0.3	)%		0.1	%
		0.0	%		0.0	%

Deferred income taxes represent the tax effect of transactions that are reported in different periods for financial and tax reporting purposes. Temporary differences and carryforwards that give rise to a significant portion of the deferred income tax benefits and liabilities are as follows at December 31, 2019 and 2018:

	2019			2018
Deferred income tax assets:
Loss carryforwards	$	21,733,983		$	12,236,973
Deferred revenue		7,871,790			6,179,875
Tax credits		5,121,644			2,681,628
Stock compensation		3,580,768			1,084,096
Other		183,118			181,734
Total deferred income tax assets		38,491,303			22,364,306
Deferred income tax liabilities
Other		(35,011	)		(35,345	)
Property, equipment and leasehold improvements		(1,293,932	)		(540,609	)
Total deferred income tax liabilities		(1,328,943	)		(575,954	)
Less valuation allowance		(37,162,360	)		(21,788,352	)
Net deferred income tax assets	$	—		$	—

The Company has provided a valuation allowance against the full amount of the deferred tax assets since, in the opinion of management, based upon the history of losses of the Company, it is more likely than not that the benefits will not be realized. All or a portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to utilize these potential tax benefits. The valuation allowance increased by $15.4 million in 2019 and $8.5 million in 2018 due to the increase in the net operating loss carryforwards, stock compensation expense and research and development tax credits.

The Company had approximately $103.5 million and $58.3 million of federal net operating loss carryforwards as of December 31, 2019 and 2018, respectively. Federal net operating loss carryforwards as of December 31, 2017 expire at various dates through fiscal year 2037 and federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such carryforwards is limited to 80% of the Company’s taxable income in the year in which carryforwards are used. The Company believes the federal net operating losses are subject to an annual limitation as a result of changes in the Company’s ownership, as defined by Federal Internal Revenue Code Section 382, in November 2019. Notwithstanding the limitations, the Company expects the federal net operating losses to be fully available under Section 382 within the next two years. The Company had approximately $5.1 million and $2.7 million of federal tax credit carryforwards as of December 31, 2019 and 2018, respectively, which expire at various dates through fiscal year 2038. The Company estimates that its federal credits will not be subject to the Section 382 limitation by 2021 and the federal tax credits will be available to offset future federal income tax.

The Company complies with the provisions of ASC 740 in accounting for its uncertain tax positions. ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely that not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The Company recognizes interest accrued related to unrecognized tax benefits and penalties in tax expense. The Company had no accruals for interest and penalties at December 31, 2019 and 2018.

The Company is required to file income tax returns in the U.S. Federal jurisdiction, and in the States of Connecticut and Massachusetts. The Company is a state franchise taxpayer in Connecticut and Massachusetts due to the Company’s loss position. As a result, there is no state income tax provision included in the financial statements. The 2016 tax year forward remain subject to future examinations by the applicable taxing authorities.

For the years ended December 31, 2019 and 2018, the Company recorded a benefit from expected cash refunds to be provided by the State of Connecticut, equal to 65% of research and development credits, of $1.4 million and $0.1 million, respectively, which is included in Other Income in the accompanying consolidated statement of operations and comprehensive loss, due to the Company being a state franchise taxpayer. The benefit results from the exchange of the state research and development tax credit carryforwards for cash refunds. At December 31, 2019 and 2018, the Company has recorded receivables of $1.4 million and $1.1 million, respectively, relating to research and development credits due to the Company.