11.	Income Taxes

The components for the income tax expense (benefit) are as follows for the years ended December 31 (in thousands):

	2016			2015			2014
Current income taxes
Federal	$	—		$	—		$	—
State		—			—			—
Foreign		—			—			—
Deferred income taxes
Federal		—			—			—
State		—			—			—
Foreign		(5,523	)		(1,024	)		—
Total income tax expense (benefit)	$	(5,523	)	$	(1,024	)	$	—

The United States and foreign components of loss from operations before taxes are as follows for the years ended December 31 (in thousands):

	2016			2015			2014
United States	$	(88,624	)	$	(44,438	)	$	(37,652	)
Foreign		(36,879	)		(3,534	)		—
Total loss from operations before taxes	$	(125,503	)	$	(47,972	)	$	(37,652	)

Significant components of the Company’s deferred tax assets consist of the following at December 31 (in thousands):

	2016			2015
Noncurrent deferred tax assets:
Stock-based compensation		2,300			1,543
Inventory		204			1,819
Accrued expenses and other		564			936
Contribution carryforward		—			2
Research credit carryforward		4,970			4,224
Fixed assets		557			275
Capitalized start-up costs and other intangibles		3,586			3,864
Net operating loss carryforwards		82,298			64,867
		94,479			77,530
Valuation allowance		(91,885	)		(75,897	)
Net noncurrent deferred tax asset		2,594			1,633
Noncurrent deferred tax liabilities
Fixed assets		(292	)		(973	)
Purchase accounting intangibles		(12,699	)		(16,923	)
Net noncurrent deferred tax liability		(12,991	)		(17,896	)
Net deferred tax asset (liability)	$	(10,397	)	$	(16,263	)

The transaction described in Note 3 was a nontaxable transaction according to ASC 740, and the goodwill recorded under U.S. GAAP purchase accounting is not deductible for tax purposes.

At December 31, 2016 and 2015, the Company has provided a full valuation allowance against its net deferred assets in the U.S. Luxembourg, and Swiss tax jurisdiction, since realization of these benefits is not more likely than not. The valuation allowance increased approximately $16.0 million from the prior year. At December 31, 2016, the Company had federal and state net operating loss tax carryforwards of approximately $221.5 million and $176.5 million, respectively. These net operating loss carryforwards expire in various amounts starting in 2027 and 2018, respectively. The Company’s federal and state net operating loss carryforwards include approximately $0.4 million of excess tax benefits related to deductions from the exercise of stock options. The tax benefit of these deductions has not been recognized in deferred tax assets. If utilized, the benefits from these deductions will be recorded as adjustments to additional paid-in capital. At December 31, 2016, the Company had federal research credit carryforwards in the amount of $5.0 million. These carryforwards begin to expire in 2027. The utilization of the federal net operating loss carryforwards and credit carryforwards will depend on the Company’s ability to generate sufficient taxable income prior to the expiration of the carryforwards. In addition, the maximum annual use of net operating loss and research credit carryforwards is limited in certain situations where changes occur in stock ownership. At December 31, 2016, the Company had foreign operating loss carryforwards in Italy of approximately $10.0 million, which can be carried forward indefinitely; foreign operating loss carryforwards in Luxembourg of approximately $0.1 million, which can be carried forward indefinitely; and foreign operating loss carryforwards in Switzerland of approximately $4.3 million, which begin to expire in 2023. The Company has no unremitted foreign earnings as of December 31, 2016.

The Company has evaluated its tax positions to consider whether it has any unrecognized tax benefits. As of December 31, 2016 the Company had gross unrecognized tax benefits of approximately $1.0 million. Of the total, none would reduce the Company’s effective tax rate if recognized. The Company does not anticipate a significant change in total unrecognized tax benefits or the Company’s effective tax rate due to the settlement of audits or the expiration of statutes of limitations within the next twelve months. Furthermore, the Company does not expect any cash settlement with the taxing authorities as a result of these unrecognized tax benefits as the Company has sufficient unutilized carryforward attributes to offset the tax impact of these adjustments.

The following is a tabular reconciliation of the Company’s change in gross unrecognized tax positions at December 31 (in thousands):

	2016		2015		2014
Beginning balance	$	862	$	606	$	—
Gross increases for tax positions related to current periods		186		256		606
Gross increases for tax positions related to prior periods		—		—		—
Ending balance	$	1,048	$	862	$	606

The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes. As of December 31, 2016 and 2015, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company has analyzed its filing positions in all significant federal, state, and foreign jurisdictions where it is required to file income tax returns, as well as open tax years in these jurisdictions. With few exceptions, the Company is no longer subject to United States Federal, state, and local tax examinations by tax authorities for years before 2013, although carryforward attributes that were generated prior to 2013 may still be adjusted upon examination by the taxing authorities if they either have been or will be used in a future period. No income tax returns are currently under examination by taxing authorities.

Taxes computed at the statutory federal income tax rate of 34% are reconciled to the provision for income taxes as follows for the years ended December 31:

	2016						2015						2014
				% of Pretax						% of Pretax						% of Pretax
	Amount			Earnings			Amount			Earnings			Amount			Earnings
United States federal tax at statutory rate	$	(42,671	)		34.0	%	$	(16,311	)		34.0	%	$	(12,801	)		34.0	%
State taxes (net of deferred benefit)		(2,487	)		2.0	%		(1,121	)		2.3	%		(786	)		2.0	%
Nondeductible expenses		667			(0.5	%)		1,797			(3.7	%)		253			(0.7	%)
Research & Development credits		(922	)		0.7	%		(1,281	)		2.7	%		(1,532	)		4.1	%
Change in unrecognized tax benefits		186			(0.1	%)		256			(0.5	%)		606			(1.6	%)
Foreign tax rate differential		3,969			(3.2	%)		175			(0.4	%)		—			0.0	%
Goodwill impairment		20,816			(16.6	%)
Change in enacted tax rates and other, net		(1,069	)		0.8	%		532			(1.2	%)		392			(1.0	%)
Change in valuation allowance		15,988			(12.7	%)		14,929			(31.1	%)		13,868			(36.8	%)
Income tax benefit	$	(5,523	)		4.4	%	$	(1,024	)		2.1	%	$	—			0.0	%