The components of (loss) income before income taxes are as follows (dollars in thousands):


	Year Ended September 30,
	2022			2021		2020
Domestic	$	(168,452	)	$	20,933	$	(27,889	)
Foreign		(30,299	)		27,336		4,849
(Loss) income before income taxes	$	(198,751	)	$	48,269	$	(23,040	)

The components of provision for (benefit from) income taxes are as follows (dollars in thousands):


	Year Ended September 30,
	2022			2021			2020
Current:
Federal	$	12		$	—		$	—
State		15			35			—
Foreign		14,761			6,760			5,844
Total current	$	14,788		$	6,795		$	5,844
Deferred:
Federal		(6,823	)		5,437			(1,636	)
State		218			5,001			(239	)
Foreign		103,892			(14,857	)		(8,693	)
Total deferred		97,287			(4,419	)		(10,568	)
Provision for (benefit from) income taxes	$	112,075		$	2,376		$	(4,724	)
Effective income tax rate		(56.4	)%		4.9	%		20.5	%

The provision for (benefit from) income taxes differed from the amount computed by applying the federal statutory rate to our income (loss) before income taxes as follows (dollars in thousands):


	Year Ended September 30,
	2022			2021			2020
Federal tax provision at statutory rate	$	(41,738	)	$	10,137		$	(4,838	)
State tax, net of federal benefit		185			3,979			(221	)
Foreign tax rate and other foreign related tax items		920			(15,626	)		(2,347	)
Uncertain tax positions		25			861			(887	)
Stock-based compensation		(15,020	)		1,629			3,456
Global intangible low-taxed income		(554	)		554			336
Goodwill impairment		39,933			—			—
Change in valuation allowance		128,034			(225	)		—
Non-deductible expenditures		1,095			3,999			2,728
R&D credits		(805	)		(2,932	)		(2,951	)
Provision for (benefit from) income taxes	$	112,075		$	2,376		$	(4,724	)

The effective income tax rate is based upon the income for the year, the composition of the income in different countries, and adjustments, if any, for the potential tax consequences, benefits or resolutions of audits or other tax contingencies. Our effective tax rate may be adversely affected by earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated in countries where we have higher statutory tax rates.

Our effective tax rate for the fiscal year 2022 differed from the U.S. federal statutory rate of 21.0%, primarily due to the establishment of a valuation allowance in a foreign jurisdiction as discussed below, impairment of book goodwill, the tax impacts of stock-based compensation, and our composition of jurisdictional earnings.

Our effective tax rate for the fiscal year 2021 differed from the U.S. federal statutory rate of 21.0%, primarily due to our composition of jurisdictional earnings, U.S. inclusions of foreign taxable income as a result of changes in applicable tax laws in 2017, and an income tax benefit of $15.9 million related to an increase in the Netherlands tax rate enacted in the first quarter of fiscal year 2021.

The effective tax rate for the fiscal year 2020 differed from the U.S. federal statutory rate of 21.0%, primarily due to our composition of jurisdictional earnings, R&D incentives, and an income tax benefit of approximately $5.0 million related to an increase in tax rates in the Netherlands enacted in the first quarter of fiscal year 2020.

As of September 30, 2022, we have not provided taxes on undistributed earnings of our foreign subsidiaries, which may be subject to foreign withholding taxes upon repatriation, as we consider these earnings indefinitely reinvested. Our indefinite reinvestment determination is based on the future operational and capital requirements of our domestic and foreign operations. We expect our international cash and cash equivalents and marketable securities will continue to be used for our foreign operations and therefore do not anticipate repatriating these funds. As of September 30, 2022, it is not practical to calculate the unrecognized deferred tax liability on these earnings due to the complexities of the utilization of foreign tax credits and other tax assets.

Deferred tax assets (liabilities) consist of the following as of September 30, 2022 and 2021 (dollars in thousands):


	September 30,
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	44,131		$	17,098
Capital loss carryforwards		8,187			8,187
Federal credit carryforwards		5,916			5,160
Accrued expenses and other reserves		3,316			5,992
Difference in timing of revenue related items		31,261			39,105
Acquired intangibles		89,434			102,481
Interest limitations carryforward		10,228			7,319
Operating lease liabilities		4,874			5,065
Depreciation		2,924			2,723
Deferred compensation		1,910			2,174
Pension obligation		730			1,870
Other		3,078			1,249
Total deferred tax assets	$	205,989		$	198,423
Valuation allowance for deferred tax assets		(126,860	)		(12,209	)
Deferred tax assets	$	79,129		$	186,214
Deferred tax liabilities:
Depreciation	$	(6,143	)	$	(4,636	)
Acquired intangibles		(14,570	)		(17,204	)
Convertible debt		(2,463	)		(3,349	)
Operating lease right-of-use assets		(4,189	)		(4,303	)
Other		(749	)		(163	)
Total deferred tax liabilities		(28,114	)		(29,655	)
Net deferred tax assets	$	51,015		$	156,559

Deferred income taxes arise from temporary difference between the tax and financial statement recognition of revenue and expenses. We regularly assess the need for a valuation allowance against our deferred tax assets. In evaluating whether it is more likely than not that some or all of our deferred tax assets will not be realized, we consider all available positive and negative evidence. During the third quarter of fiscal year 2022, we established a valuation allowance of $107.6 million against our deferred tax assets in the Netherlands, which consists of tax amortizable intellectual property and net operating loss carryforwards. We determined we had new negative evidence, based on updates to transfer pricing arrangements and changes to the earnings guidance for fiscal year 2022. We will continue to maintain a valuation allowance against our Netherlands deferred tax assets until we believe it is more likely than not that these assets will be realized. If sufficient positive evidence arises in the future indicating that all or a portion of the deferred tax assets meet the more likely than not standard, the valuation allowance would be reversed accordingly in the period that such determination is made.

The remaining deferred tax assets after valuation allowances are primarily domestic. Based on the level of historical taxable income and projections for future taxable income over the periods for which these deferred tax assets are deductible, we believe that it is more likely than not that we will realize the benefits of the domestic deductible differences.

As of September 30, 2022, we have $8.2 million and $118.7 million in valuation allowance against our net domestic and foreign deferred tax assets, respectively. As of September 30, 2021, we had $8.2 million and $4.0 million in valuation allowance against our net domestic and foreign deferred tax assets, respectively.

As of September 30, 2022, we have U.S. federal net operating loss (“NOL”) carryforwards of $43.6 million, state NOL carryforwards of $11.9 million, and foreign NOL carryforwards of $184.9 million, before uncertain tax positions of $39.5 million. As

of September 30, 2021, we have U.S. federal NOL carryforwards of $15.0 million, state NOL carryforwards of $4.3 million, and foreign NOL carryforwards of $99.9 million, before uncertain tax position amounts of $32.8 million. These carryforwards will expire at various dates beginning in 2026 and extending up to an unlimited period. As of September 30, 2022 and 2021, unlimited federal NOLs are $42.8 million and $15.0 million, respectively, and unlimited Netherlands NOLs are $157.4 million and $70.1 million, respectively.

As of September 30, 2022, we have U.S. federal research and development carryforwards and foreign tax credit carryforwards of $10.1 million, before uncertain tax positions of $8.1 million, state research and development credits of $0.2 million, and foreign research and development credits of $4.9 million. As of September 30, 2021, we have U.S. federal research and development carryforwards and foreign tax credit carryforwards of $10.8 million, before uncertain tax positions of $9.1 million, state research and development credits of $0.3 million, and foreign research and development credits of $4.3 million. These carryforwards will expire at various dates beginning in 2023 and extending up to 2041.

ASC 740 prescribes the accounting for uncertainty in income taxes recognized in the financial statements. We regularly assess the outcome of potential examinations in each of the taxing jurisdictions when determining the adequacy of the amount of unrecognized tax benefit recorded. We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit which is more likely than not to be realized upon ultimate settlement. We recognize interest and penalties related to unrecognized tax positions in our provision for (benefit from) income taxes line of our Consolidated Statements of Operations.

The aggregate changes in the balance of our gross unrecognized tax benefits were as follows (dollars in thousands):


	September 30,
	2022			2021
Balance at the beginning of the year	$	87,144		$	67,358
Beginning balance adjustment		(13,181	)		9,884
Increases related to tax positions taken from prior periods		2,277			9,367
Increases related to tax positions taken during current period		2,088			768
Decreases for tax settlements and lapse in statutes		(1,738	)		(233	)
Balance at the end of the year	$	76,590		$	87,144

During fiscal year 2021, we finalized pre-spin tax attributes and recognized as beginning balance adjustments uncertain tax positions of $9.1 million on certain tax credit carryforwards. As of September 30, 2022 and 2021, beginning balance adjustments include cumulative translation adjustments of ($13.2) million and $0.8 million, respectively.

Increases related to tax positions taken from prior period include the effect of tax rate changes of $2.3 million and $9.4 million at September 30, 2022 and 2021, respectively.

As of September 30, 2022, $76.6 million of the unrecognized tax benefits, if recognized, would impact our effective tax rate. We do not expect a significant change in the amount of unrecognized tax benefits within the next 12 months. We recognized interest related to uncertain tax positions in our provision for (benefit from) income taxes of ($0.3) million, $0.3 million and ($0.1) million during fiscal years 2022, 2021 and 2020 respectively. We recorded interest of $3.5 million and $4.2 million as of September 30, 2022 and 2021, respectively.

We are subject to U.S. federal income tax, various state and local taxes and international income taxes in numerous jurisdictions. The 2016 through 2021 tax years remain open for all purposes of examination by the IRS and other taxing authorities in material jurisdictions.