Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
Loss before provision for (benefit from) income taxes consists of the following (in thousands):
The components of income tax expense (benefit) consist of the following (in thousands):
A reconciliation between the expected income tax provision at the federal statutory rate and the reported income tax benefit is as follows:
The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities as of December 31, 2020 and 2019, are related to the following:
The Company has incurred significant tax losses since inception. Based on the available objective evidence, the Company cannot conclude it is more likely than not that the net deferred tax assets will be fully realizable. Accordingly, the Company has provided a valuation allowance against its net deferred tax assets. For the years ended December 31, 2020, 2019 and 2018, the valuation allowance increased by $74.1 million, $42.3 million, and $26.0 million, respectively. As of December 31, 2020, the Company has net operating loss carryforwards of $483.7 million for federal purposes and $216.8 million for state tax purposes. If not utilized, these carryforwards will begin expiring in 2035 for federal and in 2031 for state tax purposes. The federal net operating losses (“NOLs”) generated after December 31, 2017, have an infinite carryforward period and subject to 80% deduction limitation based upon pre-NOL deduction taxable income. As of December 31, 2020, the Company also has net operating loss carryforwards of $17.8 million for Swiss tax purposes, which begin expiring in 2022 and no net operating loss carryforward for Australian tax purposes. Under the Tax Reform Act of 1986, the amounts of and benefits from net operating loss carryforwards may be impaired or limited in certain circumstances. Events which cause limitations in the amount of net operating losses that the Company may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. The impact of any limitations that may be imposed due to such ownership changes has not yet been determined. As of December 31, 2020, the Company has research tax credit carryforwards of $9.1 million and $7.0 million for federal and state tax purposes, respectively. If not utilized, the federal carryforward will expire in various amounts beginning in 2036. The California credits can be carried forward indefinitely. If not utilized, Oregon carryforward will expire starting 2021. The Company has not undertaken a detailed analysis of all amounts claimed as research credits for federal or state tax purposes. As a result, amounts ultimately realized for research credits were included in the Company’s consideration of uncertain tax benefits. Uncertain Tax Positions As of December 31, 2020 and 2019, the Company had an unrecognized tax benefit of $4.9 million and $2.7 million, respectively, related to transfer pricing and research and development tax credits. No amount of unrecognized tax benefits as of December 31, 2020, if recognized, would reduce the Company’s effective tax rate because the benefits would be in the form of tax credit carryforwards, which would attract a full valuation allowance. There are no provisions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date. Because the statute of limitations does not expire until after the net operating loss and credit carryforwards are actually used, the statutes are still open on calendar years ending December 31, 2020 forward for federal and state purposes.
The Company did not recognize any expense for interest and penalties related to uncertain tax positions during 2020, 2019 and 2018, and the Company does not have any amounts related to interest and penalties accrued at December 31, 2020. The Company files U.S. federal, state, Switzerland and Australia tax returns. The Company’s tax years remain open for all years. As of December 31, 2020, the Company was not under examination by the Internal Revenue Service or any state or foreign tax jurisdiction. A reconciliation of the beginning and ending amounts of the liability for uncertain tax positions is as follows:
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