INCOME TAXES

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The components of loss before provision for (benefit from) income taxes for the years ended December 31, 2022, 2021 and 2020, are as follows (in thousands):

	2022		2021		2020
Loss subject to domestic income taxes	$	(1,306,245)	$	(2,580,324)	$	(719,636)
Income subject to foreign income taxes	2,164		612		68
	$	(1,304,081)	$	(2,579,712)	$	(719,568)

The Company recorded $0.4 million and immaterial amount of provision for income taxes for the years ended December 31, 2022 and 2021, respectively, and $(0.2) million of benefit from income taxes for the year ended December 31, 2020. The Company recorded provision for (benefit from) income taxes in connection with its domestic, state, and foreign subsidiaries for the years ended December 31, 2022, 2021 and 2020, respectively, as follows (in thousands):

	2022		2021		2020
Current
Federal	$	—	$	18	$	—
State	14		4		5
Foreign	365		27		(193)
Total current tax expense (benefit)	$	379	$	49	$	(188)
Deferred
Federal	$	—	$	—	$	—
State	—		—		—
Foreign	—		—		—
Total deferred tax expense (benefit)	$	—	$	—	$	—
Total Provision for (benefit from) income taxes	$	379	$	49	$	(188)

The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the years ended December 31, 2022, 2021 and 2020 was as follows:

	Year Ended December 31,
	2022	2021	2020
Statutory federal income tax rate	21.0%	21.0%	21.0%
Stock-based compensation	(0.6)	(2.9)	(0.2)
Change in fair value of warrant liability	20.2	(8.5)	(3.4)
Tax-exempt interest	0.4	—	—
Nondeductible expenses	0.4	(0.3)	(0.1)
Tax credits	1.4	0.7	2.8
Change in valuation allowance	(42.8)	(10.0)	(20.1)
Provision for (benefit from) income taxes	—%	—%	—%

The effective tax rate was 0.0% for the years ended December 31, 2022, 2021 and 2020. The amount of provision for (benefit from) income taxes differs from the expected benefit due to the impact of the U.S. valuation allowance.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred taxes as of December 31, 2022 and 2021, are as follows (in thousands):

	2022		2021
Deferred tax assets:
Net operating loss carryforwards	$	974,097	$	519,410
Tax credit carryforwards	104,678		71,783
Stock-based compensation expense	26,438		22,559
Capitalization of research and development costs	174,564		—
Accruals and reserves	100,622		59,894
Lease Liability	84,635		52,592
Other	19,037		8,547
Total deferred tax assets	1,484,071		734,785
Valuation allowance	(1,374,265)		(672,898)
Total deferred tax assets, net of valuation allowance	109,806		61,887
Deferred tax liabilities:
Depreciation	(39,618)		(20,180)
Right-of-use assets	(70,188)		(41,707)
Total deferred tax liabilities	(109,806)		(61,887)
Deferred tax assets (liabilities), net of valuation allowance	$	—	$	—

The Company does not provide deferred tax liabilities when it intends to reinvest earnings of its foreign subsidiaries indefinitely. As of December 31, 2022 and 2021, the Company has no undistributed earnings from its foreign subsidiaries.

A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized in a particular tax jurisdiction. All available evidence, both positive and negative, is considered to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of a deferred tax asset. Judgment must be used in considering the relative impact of negative and positive evidence.

Based on the weight of the available evidence, which includes the Company’s historical operating losses, lack of taxable income, and the accumulated deficit, as of December 31, 2022 and 2021, the Company provided a full valuation allowance against its U.S. and state deferred tax assets. The valuation allowance for deferred tax assets was $1,374.3 million and $672.9 million, as of December 31, 2022 and 2021, respectively. The valuation allowance on our net deferred taxes increased by $701.4 million and $312.3 million during the years ended December 31, 2022 and 2021, respectively.

The Company had federal, state, and foreign net operating loss carryforwards of approximately $3,696.1 million, $2,492.0 million, and $2.0 million, respectively, as of December 31, 2022, which will begin to expire at various dates beginning in 2023. The Company also had federal and state tax research and development tax credit carryforwards of approximately $117.9 million and $91.4 million, respectively. The federal research and development tax credit carryforwards will expire at various dates beginning in 2036, if not utilized. The state research and development tax credit carryforwards do not expire.

The Internal Revenue Code of 1986, as amended, imposes restrictions on the utilization of net operating losses and certain credits in the event of an “ownership change” of a corporation. Accordingly, a company’s ability to use net operating losses and certain credits may be limited as prescribed under.

Internal Revenue Code Section 382, which provide for limitations on net operating losses carryforwards and certain built in losses following ownership changes, and Section 383, which provides for special limitations on certain excess credits, etc. (collectively, “IRC Section 382”). Utilization of the carryforwards may be subject to substantial annual limitation due to the ownership change limitations provided by the IRC Section 382 and similar state provisions, resulting in a reduction in the gross deferral tax assets before considering the valuation allowance. We have completed a formal Section 382 study of our equity transactions through December 31, 2020. The study determined that we experienced an “ownership change” in 2016, and we will not be able to utilize approximately $12.0 million of our gross U.S. federal NOL and $15.0 million of gross U.S. federal research and development tax credit (or $3.0 million in net credit) carryforwards.

The Company files U.S., state, and foreign income tax returns with varying statutes of limitations. The federal, state, and foreign returns statute of limitations remains open for tax years from 2008 and thereafter. There are currently no income tax audits underway by U.S., state, or foreign tax authorities.

Uncertain Tax Positions

As of December 31, 2022, 2021 and 2020, the total amount of unrecognized tax benefits was approximately $105.2 million, $72.3 million, and $42.9 million, respectively, of which $0.6 million, $0.5 million and $2.6 million, if recognized for respective periods, would favorably impact the Company's effective tax rate. The Company does not anticipate a significant change in the total amount of unrecognized tax benefits within the next 12 months.

The following table summarizes the activity related to unrecognized tax benefits for the years ended December 31, 2022, 2021 and 2020 (in thousands):

	December 31,
	2022		2021		2020
Unrecognized benefit—beginning of period	$	72,330	$	42,894	$	20,635
Gross increases—prior-period tax positions	—		—		21
Gross decreases—prior-period tax positions	—		—		(2)
Gross increases—current-period tax positions	32,916		31,336		22,382
Gross decrease—current-period tax positions	—		—		—
Statute lapse	(12)		(1,900)		(142)
Unrecognized benefit—end of period	$	105,234	$	72,330	$	42,894

Related to the unrecognized tax benefits above, the Company recognized immaterial interest expense and penalty expense as part of provision for (benefit from) income taxes in the consolidated statements of operations and comprehensive loss. As of December 31, 2022, the Company has recognized a liability for immaterial interest expense and penalties, which was included within Other long-term liabilities in the consolidated balance sheets.