Income (loss) before provision for income taxes includes the following components (in thousands):

	Year Ended December 31,
	2018		2017			2016
Domestic	$	680,423	$	(97,938	)	$	(155,375	)
Foreign		2,302		1,862			2,727
Income (loss) before provision for income taxes	$	682,725	$	(96,076	)	$	(152,648	)

	Year Ended December 31,
	2018		2017		2016
Current:
Federal	$	—	$	—	$	—
State		699		1		(1	)
Foreign		620		580		992
Total Current		1,319		581		991
Deferred:
Federal		—		—		—
State		—		—		—
Foreign		93		35		(115	)
Total Deferred		93		35		(115	)
Provision for income taxes	$	1,412	$	616	$	876

Income tax provision related to continuing operations differs from the amount computed by applying the statutory income tax rate of 21% for 2018 and 35% for 2017 and 2016 to pretax income (loss) as follows (in thousands):

	Year Ended December 31,
	2018			2017			2016
Income tax expense (benefit) at federal statutory rate	$	143,372		$	(33,627	)	$	(53,427	)
Non-cash interest expense on liability related to sale of future royalties		4,451			6,604			6,899
Non-deductible officers' compensation		3,182			2,547			220
Tax law changes		45			248,155			—
Stock-based compensation		(66,716	)		(20,665	)		528
Change in valuation allowance		(46,885	)		(186,124	)		51,981
Research credits		(17,295	)		(8,038	)		(4,543	)
Premium on equity issuance		(12,551	)		—			—
Sale of future royalties		(6,995	)		(8,236	)		—
Other		804			—			(782	)
Provision for income taxes	$	1,412		$	616		$	876

The U.S. Tax Cuts and Jobs Act (the Tax Act) was enacted on December 22, 2017. The Tax Act reduces the U.S. federal corporate tax rate from 35% in 2017 to 21% in 2018, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. At December 31, 2018, we have completed our accounting for the tax effects of enactment of the Tax Act, which, other than the $248.2 million decrease in the valuation of our federal deferred tax assets shown above, did not have a material effect on our Consolidated Financial Statements.

Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which includes the change in the federal rate to 21% as of December 31, 2017. Significant components of our deferred tax assets for federal and state income taxes are as follows (in thousands):

	December 31,
	2018			2017
Deferred tax assets:
Net operating loss carryforwards	$	300,693		$	364,864
Research and other credits		116,955			94,103
Stock-based compensation		21,518			14,552
Capitalized research expenses		8,072			5,497
Reserves and accruals		8,066			5,659
Deferred revenue		4,467			3,796
Property, plant and equipment		2,124			6,848
Other		(1,270	)		1,156
Deferred tax assets before valuation allowance		460,625			496,475
Valuation allowance for deferred tax assets		(460,455	)		(496,191	)
Total deferred tax assets		170			284
Total deferred tax liabilities		—			—
Net deferred tax assets	$	170		$	284

Realization of our deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Because of our lack of U.S. earnings history, other than income resulting from revenue recognized from the BMS collaboration agreement, and projected future losses, the net U.S. deferred tax assets have been fully offset by a valuation allowance. The valuation allowance decreased by $35.7 million and $169.3 million during the years ended December 31, 2018 and 2017, respectively, and increased by $52.5 million during the year ended December 31, 2016. The decrease in the valuation allowance for the year ended December 31, 2018 reflects the utilization of net operating loss carryforwards to offset federal and state taxable income, and the decrease in the valuation allowance for the year ended December 31, 2017 is primarily due to the change in the federal rate. The valuation allowance includes approximately $35.6 million of income tax benefit at both December 31, 2018 and December 31, 2017 related to stock-based compensation that will be included in income tax expense in our Consolidated Statement of Operations when realized.

For 2017, the one-time transition tax under the Tax Act was based on our total post-1986 earnings and profits (E&P) that we previously deferred from U.S. income taxes. We concluded that there was negative E&P on an aggregate basis and we have not recorded any amount for any one-time transition tax triggered by the Tax Act. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations.

As of December 31, 2018, we had a net operating loss carryforward for federal income tax purposes of approximately $1,304.1 million, portions of which will begin to expire in 2022. As of December 31, 2018, we had a total state net operating loss carryforward of approximately $471.1 million, portions of which will begin to expire in 2024. Utilization of some of the federal and state net operating loss and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions.

We have federal research credits of approximately $101.0 million, which will begin to expire in 2020 and state research credits of approximately $40.0 million which have no expiration date. We have federal orphan drug credits of $17.7 million which will begin to expire in 2026. These tax credits are subject to the same limitations discussed above.

With the exception of net income recognized in 2018, we have incurred net operating losses since inception. Our policy is to include interest and penalties related to unrecognized tax benefits, if any, within the provision for income taxes in the consolidated statements of operations. If we are eventually able to recognize our uncertain positions, our effective tax rate may be reduced. We currently have a full valuation allowance against our U.S. net deferred tax asset which would impact the timing of the effective tax rate benefit should any of these uncertain tax positions be favorably settled in the future. Adjustments to the substantial majority of our uncertain tax positions would result in an adjustment of our net operating loss or tax credit carry forwards rather than resulting in a cash outlay.

We file income tax returns in the U.S., California, Alabama, certain other states and India. Because of net operating losses and research credit carryovers, substantially all of our domestic tax years remain open and subject to examination. We are currently under examination in India for the fiscal years ending 2009, 2016 and 2017.

We have the following activity relating to unrecognized tax benefits (in thousands):

	December 31,
	2018		2017			2016
Beginning balance	$	20,483	$	18,413		$	17,384
Tax positions related to current year
Additions:
Federal		2,019		1,206			530
State		3,645		1,666			499
Reductions		—		—			—
Tax positions related to prior year
Additions:
Federal		669		—			—
State		603		—			—
Foreign		—		—			—
Reductions				(802	)		—
Settlements		—		—			—
Lapses in statute of limitations		—		—			—
Ending balance	$	27,419	$	20,483		$	18,413

Although it is reasonably possible that certain unrecognized tax benefits may increase or decrease within the next twelve months, we do not anticipate any significant changes to unrecognized tax benefits over the next twelve months. During the years ended December 31, 2018, 2017 and 2016, no significant interest or penalties were recognized relating to unrecognized tax benefits.