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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes
14. Income Taxes
The Company recorded a provision (benefit) for income taxes of $2.6 million, $1.4 million and $(1.8) million and the effective rates were approximately 0% for the years ended December 31, 2023, 2022 and 2021. The income tax provision for the years ended December 31, 2023 and December 31, 2022 reflected current income tax expense recorded as a result of the taxable income in certain of the Company's non-US subsidiaries and certain state income taxes. The income tax (benefit) for the year ended December 31, 2021 is primarily due to the partial reversal of a valuation allowance as a result of the Business Acquisition (see Note 18), partially offset by current income tax expense. While the Business Acquisition resulted in a deferred tax liability recorded under ASC 805, an adjustment to the valuation allowance is required as this deferred tax liability provides a future reversal of a taxable temporary difference.
The Company's loss before income taxes in the US and globally was as follows (in thousands):
 Years Ended December 31,
202320222021
US$(666,181)$(406,262)$(348,845)
Foreign(80,831)(73,889)(87,567)
Total$(747,012)$(480,151)$(436,412)
The Company's income tax provision (benefit) consisted of the following (in thousands):
 Years Ended December 31,
 202320222021
Current:   
Federal$— $— $— 
State378 269 104 
Foreign2,231 1,345 1,585 
2,609 1,614 1,689 
Deferred:   
Federal(13)13 (2,835)
State(41)(244)(612)
Foreign— — — 
(54)(231)(3,447)
Total$2,555 $1,383 $(1,758)
The reconciliation between the federal statutory tax rates and the Company's effective tax rate is as follows:
 Years Ended December 31,
 202320222021
Statutory federal tax rate21 %21 %21 %
Permanent items(1)%— %(1)%
State income taxes, net of federal benefit3 %1 %4 %
R&D and other tax credits3 %3 %4 %
Foreign income taxes(1)%— %(1)%
Change in valuation allowance(21)%(22)%(27)%
Asset acquisitions (see Note 18)(3)%— %— %
Stock-based compensation(1)%(2)%— %
Other— %(1)%— %
Effective tax rate— %— %— %
Deferred tax assets and liabilities are determined based on the difference between financial statement and tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. The components of the deferred tax assets and liabilities consist of the following:
As of December 31,
 20232022
Deferred tax assets:  
Net operating loss carryforwards$563,869 $499,029 
General business credits182,006 157,181 
Product license3,867 4,317 
Inventory2,341 1,470 
Lease liabilities12,000 12,965 
Stock-based compensation27,916 23,724 
Capitalized R&D115,299 56,275 
Other19,286 15,001 
Deferred tax assets926,584 769,962 
Valuation allowance(904,078)(745,135)
Deferred tax assets, net of valuation allowance$22,506 $24,827 
Deferred tax liabilities:  
Intangibles$(13,006)$(13,739)
Right-of-use assets(9,585)(11,227)
Deferred tax liabilities$(22,591)$(24,966)
  Net deferred tax liabilities$(85)$(139)
The deferred tax assets, net of valuation allowance of $22.5 million and $24.8 million at December 31, 2023 and 2022, respectively, primarily consist of net operating loss and tax credit carryforwards for income tax purposes. As required by the 2017 Tax Cuts and Jobs Act, effective January 1, 2022, our research and development expenditures were capitalized resulting in a deferred tax asset. Due to the Company's history of operating losses, the Company recorded a valuation allowance on its net deferred tax assets by increasing the valuation allowance by $158.9 million and $157.7 million in 2023 and 2022, respectively, as it was more likely than not that such tax benefits will not be realized. A portion of the valuation allowance increase in 2022 is charged to tax expense and the remainder was charged to equity resulting from the adoption of ASU 2020-06, under which the net deferred tax liability associated with the convertible debt is removed through equity.
At December 31, 2023, the Company had federal net operating loss (NOL) carryforwards for income tax purposes of approximately $1.8 billion and federal tax credit carryforwards of $190.2 million. Due to the limitation on NOLs as more fully discussed below, $1.6 billion of the NOLs are available to offset future taxable income, if any. The NOL carryovers and general business tax credits expire in various years beginning in 2024. For state tax purposes, the Company has approximately $1.1 billion of NOLs in various states available to offset against future taxable income and state tax credit carryforwards of $4.7 million, expiring in various years beginning in 2024. The Company has $361.0 million of non-trading loss carryforwards in Ireland and loss carryforwards in the United Kingdom and Switzerland of $21.2 million and $75.8 million, respectively. The loss carryforwards in Ireland and the United Kingdom carry forward indefinitely while the loss carryforward in Switzerland begins to expire in 2030. The Company has disallowed interest expense carryover of $28.3 million which carries forward indefinitely.
The Company completed an Internal Revenue Code Section 382 (Section 382) analysis in order to determine the amount of losses that are currently available for potential offset against future taxable income, if any. It was determined that the utilization of the Company's NOL and general business tax credit carryforwards generated in tax periods up to and including December 2010 were subject to substantial limitations under Section 382 due to ownership changes that occurred at various points from the Company's original organization through December 2010. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of shareholders that own, directly or indirectly, 5% or more of a corporation's stock, in the stock of a corporation by more than 50 percentage points over a testing period (usually 3 years). Since the Company's formation in 1999, it has raised capital through the issuance of common stock on several occasions
which, combined with the purchasing shareholders' subsequent disposition of those shares, have resulted in multiple changes in ownership, as defined by Section 382. These ownership changes resulted in substantial limitations on the use of the Company's NOLs and general business tax credit carryforwards up to and including December 2010. The Company continues to track all of its NOLs and tax credit carryforwards but has provided a full valuation allowance to offset those amounts.
Law Changes
On August 16, 2022, the IRA was enacted into law containing corporate income tax provisions such as the corporate alternative minimum tax and an excise tax on the repurchase of corporate stock. These provisions are not expected to have a material impact on the Company’s income taxes in the near term.
The financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50% likely of being realized upon ultimate settlement. If such unrecognized tax benefits were realized and not subject to valuation allowances, the Company would recognize a tax benefit of $14.8 million. The following table summarizes the gross amounts of unrecognized tax benefits (in thousands):
20232022
Balance as of January 1,$11,539 $7,382 
Additions related to prior period tax positions230 1,564 
Reductions related to prior period tax positions— — 
Additions related to current period tax positions2,984 2,593 
Balance as of December 31,$14,753 $11,539 
The Company is subject to US federal and state income taxes and the statute of limitations for tax audit is open for the federal tax returns for the years ended 2020 and later, and is generally open for certain states for the years 2019 and later. The Company has incurred net operating losses since inception, except for the year ended December 31, 2009. Such loss carryforwards would be subject to audit in any tax year in which those losses are utilized, notwithstanding the year of origin.
The Company's policy is to recognize interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company has recorded no such expense. As of December 31, 2023 and 2022, the Company has recorded reserves for unrecognized income tax benefits of $14.8 million and $11.5 million, respectively. As any adjustment to the Company’s uncertain tax positions would not result in a cash tax liability, it has not recorded any accrued interest or penalties related to its uncertain tax positions. If any of these unrecognized tax benefits were released, there would be no impact to the Company's effective tax rate. The Company does not anticipate any material changes in the amount of unrecognized tax positions over the next 12 months.