Income Taxes

9 Months Ended

Sep. 30, 2020

INCOME TAXES

The following table summarizes our effective tax rate and income tax (benefit) expense for the three and nine months ended September 30, 2020 and 2019 (in thousands except for percentages):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Effective tax rate	(1)		%	(1)		%	—		%	—		%
Income tax (benefit) expense	$	(53)		$	232		$	(113)		$	(26)

For the three and nine months ended September 30, 2020, we recognized an immaterial income tax benefit, representing an effective tax rate of (1)% and 0%, respectively. The difference between the statutory federal tax rate of 21% and the effective tax rates for the three and nine months ended September 30, 2020, was primarily attributable to the valuation allowance established against our current period losses generated. We have established a valuation allowance on our deferred tax assets to the extent that our existing taxable temporary differences would not be available as a source of income to realize the benefits of those deferred tax assets. The income tax benefit for the three and nine months ended September 30, 2020 primarily related to state income taxes.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law making several changes to the Internal Revenue Code. The changes include, but are not limited to, temporarily increasing the limitation on the amount of deductible interest expense, allowing taxpayers with alternative minimum tax credits to claim a refund for the entire amount of the credit instead of recovering the credit through refunds over a period of years, as required by the 2017 Tax Cuts and Jobs Act, allowing companies to carryback certain net operating losses, and temporarily increasing the amount of net operating loss carryforwards that corporations can use to offset taxable income. The tax law changes in the CARES Act did not have a material impact on our income tax provision.

For the three and nine months ended September 30, 2019, we recognized an immaterial income tax expense and an immaterial income tax benefit, representing an effective tax rate of (1)% and 0%, respectively. The income tax expense for the three months ended September 30, 2019 primarily related to state income taxes. The income tax benefit for the nine months ended September 30, 2019 primarily related to the offset of the recognition of the income tax expense recorded in other comprehensive loss associated with the increase in the fair value of the available-for-sale debt securities that we carried at fair market value during the period, partially offset by state income taxes. The difference between the statutory federal tax rate of 21% and the effective tax rate of (1)% and 0% for the three and nine months ended September 30, 2019, respectively, was primarily attributable to the valuation allowance established against our current period losses generated and the non-deductible IPR&D expense related to the Perosphere acquisition.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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