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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Components of income tax expense (benefit) for continuing operations were as follows:
| Year Ended December 31,
(in millions) | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | 6.3 |  |  | 10.1 |  |  | 9.5 |
Total current taxes | 6.3 |  |  | 10.1 |  |  | 9.5 |
Deferred: |  |  |  |  |
Federal | 5.9 |  |  | (287.5) |  |  | — |
State | (0.4) |  |  | (23.2) |  |  | — |
Total deferred taxes | 5.5 |  |  | (310.7) |  |  | — |
Provision for (benefit from) income taxes | $ | 11.8 |  |  | $ | (300.6) |  |  | $ | 9.5 |
The provision for (benefit from) income taxes on earnings subject to income taxes differs from the statutory federal rate due to the following:
| Year Ended December 31,
(in millions) | 2021 |  | 2020 |  | 2019
Federal income taxes at 21% | $ | 21.3 |  |  | $ | 22.4 |  |  | $ | 9.8 |
State income tax, net of federal benefit | 6.2 |  |  | 5.5 |  |  | 4.0 |
Non-deductible expenses | 0.2 |  |  | 0.6 |  |  | 0.8 |
Branded prescription drug fee | 4.8 |  |  | 4.9 |  |  | 3.7 |
Share-based compensation expense | (11.3) |  |  | (6.7) |  |  | (12.8) |
Officer compensation | 7.0 |  |  | 3.7 |  |  | 3.1 |
Change in tax rate | 0.2 |  |  | 3.3 |  |  | (4.1) |
Expired tax attributes | 0.6 |  |  | 1.1 |  |  | 1.2 |
Research credits | (22.0) |  |  | (39.0) |  |  | (10.4) |
Change in valuation allowance | 5.0 |  |  | (296.3) |  |  | 13.9 |
Other | (0.2) |  |  | (0.1) |  |  | 0.3 |
Provision for (benefit from) income taxes | $ | 11.8 |  |  | $ | (300.6) |  |  | $ | 9.5 |
Significant components of our deferred tax assets as of December 31, 2021 and 2020 are listed below.
| December 31,
(in millions) | 2021 |  | 2020
Deferred tax assets: |  |  |
Net operating losses | $ | 90.3 |  |  | $ | 111.4 |
Research and development credits | 129.7 |  |  | 109.6 |
Capitalized research and development | 17.9 |  |  | 24.7 |
Share-based compensation expense | 38.9 |  |  | 29.8 |
Operating lease assets | 29.3 |  |  | 25.2 |
Intangible assets | 86.1 |  |  | 86.7 |
Other | 21.6 |  |  | 23.9 |
Total deferred tax assets | 413.8 |  |  | 411.3 |
Deferred tax liabilities: |  |  |
Convertible senior notes | (9.9) |  |  | (13.8) |
Operating lease liabilities | (23.3) |  |  | (19.9) |
Other | (10.7) |  |  | (8.4) |
Total deferred tax liabilities | (43.9) |  |  | (42.1) |
Net of deferred tax assets and liabilities | 369.9 |  |  | 369.2 |
Valuation allowance | (54.8) |  |  | (49.8) |
Net deferred tax assets | $ | 315.1 |  |  | $ | 319.4 |
As of December 31, 2021, our deferred tax assets were primarily the result of federal net operating loss carry forwards, capitalized research costs, acquired intangible assets and tax credit carryforwards. As of December 31, 2021 and 2020, we recorded a valuation allowance of $54.8 million and $49.8 million, respectively, against our gross deferred tax asset balance. As of each reporting date, management considers new evidence, both positive and negative, that could affect its assessment of the future realizability of our deferred tax assets. As of December 31, 2021, management determined there was sufficient positive evidence to conclude that it is more likely than not deferred tax assets of $315.1 million are realizable. The recorded valuation allowance of $54.8 million consisted primarily of state net operating loss and credit carryforwards for which management could not conclude it is more likely than not to be realized. As of December 31, 2021, we had federal and state income tax net operating loss carryforwards of $421.1 million and $329.9 million, respectively. The federal net operating losses will begin to expire in 2028, unless previously utilized. California net operating losses will begin to expire in 2031 unless previously utilized and the net operating losses related to other states will begin to expire in 2026. In addition, we had federal and state R&D tax credit carryforwards of $107.3 million and $66.3 million, respectively. A portion of the federal R&D tax credit carryforwards expired in 2021. The remaining federal R&D tax credits will continue to expire beginning in 2022, unless previously utilized. The California R&D tax credits carry forward indefinitely and the R&D tax credits related to other states will begin to expire in 2022, unless previously utilized. Additionally, the future utilization of our net operating loss and R&D tax credit carryforwards to offset future taxable income may be subject to an annual limitation, pursuant to Internal Revenue Code Sections 382 and 383, as a result of ownership changes that could occur in the future. No ownership changes have occurred through December 31, 2021. The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Our policy is to recognize interest or penalties related to income tax matters in income tax expense. Interest and penalties related to income tax matters were not material for 2021, 2020 or 2019. We are subject to taxation in the United States and various state jurisdictions. Our tax years for 2001 for federal and since inception for California and forward are subject to examination by federal and state tax authorities due to the carryforward of unutilized net operating losses and R&D tax credits. A summary of activity related to unrecognized tax benefits follows:
| Year Ended December 31,
(in millions) | 2021 |  | 2020 |  | 2019
Balance at January 1 | $ | 60.8 |  |  | $ | 63.9 |  |  | $ | 54.8 |
Increase (decrease) related to prior year tax positions | 0.6 |  |  | (5.7) |  |  | 0.3 |
Increase related to current year tax positions | 4.9 |  |  | 3.9 |  |  | 9.5 |
Settlements related to prior year tax positions | — |  |  | (0.2) |  |  | — |
Expiration of the statute of limitations for the assessment of taxes | (1.7) |  |  | (1.1) |  |  | (0.7) |
Balance at December 31 | $ | 64.6 |  |  | $ | 60.8 |  |  | $ | 63.9 |
We excluded those deferred tax assets that are not more-likely-than-not to be sustained under the technical merits of the tax position. Such unrecognized tax benefits totaled $4.9 million for current year tax positions, as reflected in the table above. As of December 31, 2021, we had $57.4 million of unrecognized tax benefits that, if recognized and realized, would affect the effective tax rate, subject to the valuation allowance. We do not expect a significant change in our unrecognized tax benefits in the next twelve months.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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