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Income Taxes | 12 Months Ended
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Dec. 28, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Our income (loss) before income taxes is derived solely from within the U.S. The Income tax benefit (provision) was as follows (in thousands):
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | (6,133 | ) |  | (4,350 | ) |  | — |
Total current tax expense | (6,133 | ) |  | (4,350 | ) |  | — |
Deferred: |  |  |  |  |
Federal | 238,675 |  |  | — |  |  | — |
State | 5,436 |  |  | — |  |  | — |
Total deferred tax expense | 244,111 |  |  | — |  |  | — |
Income tax benefit (provision) | $ | 237,978 |  |  | $ | (4,350 | ) |  | $ | — |
The income tax benefit for the year ended December 31, 2018 primarily relates to the release of our valuation allowance against significantly all of our deferred tax assets offset by state taxes in jurisdictions outside of California, for which we do not have net operating loss carryforwards due to a limited operating history. Our historical net operating losses are sufficient to fully offset any federal taxable income. The Income tax provision for the year ended December 31, 2017, related to state taxes in jurisdictions outside of California, for which we do not have net operating loss carryforwards due to a limited operating history. The reconciliation of the U.S. federal income tax (provision) benefit at the statutory federal income tax rates of 21%, 34% and 34% for the years ended December 31, 2018, 2017 and 2016, respectively, to our Income tax benefit (provision) was as follows (in thousands):
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
U.S. federal income tax (provision) benefit at statutory rate | $ | (94,939 | ) |  | $ | (53,916 | ) |  | $ | 23,876 |
State tax expense | (4,690 | ) |  | (8,282 | ) |  | (6,520 | )
Change in valuation allowance | 315,394 |  |  | 34,266 |  |  | (6,377 | )
Research credits | 18,308 |  |  | — |  |  | — |
Stock-based compensation | 5,998 |  |  | 20,548 |  |  | (3,155 | )
Non-deductible interest | — |  |  | (1,367 | ) |  | (2,680 | )
Debt extinguishment | — |  |  | — |  |  | (4,726 | )
Other | (2,093 | ) |  | 4,401 |  |  | (418 | )
Income tax benefit (provision) | $ | 237,978 |  |  | $ | (4,350 | ) |  | $ | — |
Deferred tax assets and liabilities reflect the net tax effects of net operating loss and tax credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. Our deferred tax assets and liabilities were as follows (in thousands):
| December 31,
| 2018 |  | 2017
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 146,701 |  |  | $ | 244,205 |
Tax credit carryforwards | 98,467 |  |  | 66,770 |
Book over tax depreciation and amortization | 29,929 |  |  | 39,472 |
Amortization of deferred stock compensation – non-qualified | 11,366 |  |  | 8,966 |
Accruals and reserves not currently deductible | 10,425 |  |  | 4,914 |
Deferred revenue | 5,474 |  |  | 53,543 |
Other assets | 1,140 |  |  | 1,088 |
Total deferred tax assets | 303,502 |  |  | 418,958 |
Valuation allowance | (58,112 | ) |  | (418,958 | )
Net deferred tax assets | 245,390 |  |  | — |
Deferred tax liabilities: |  |  |
Operating lease right-of-use assets | (1,279 | ) |  | — |
Total deferred tax liabilities | (1,279 | ) |  | — |
Net deferred taxes | $ | 244,111 |  |  | $ | — |
We applied the guidance in the Securities and Exchange Commission’s Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, when accounting for the enactment-date effects of the Tax Cuts and Jobs Act in 2017 and throughout 2018. At December 31, 2017, we had not completed our accounting for all the enactment-date income tax effects of the Tax Cuts and Jobs Act for Section 162(m) related to the deduction limitation for the remuneration of certain employees. As of December 31, 2018, we have now completed our accounting for all of the enactment-date income tax effects of the Tax Cuts and Jobs Act and the impact was not material. ASC Topic 740: Income Taxes (Topic 740) requires that the tax benefit of net operating losses, temporary differences and credit carry forwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on our ability to generate sufficient taxable income within the carry forward period. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of December 31, 2018, based on the evaluation and weighting of both positive and negative evidence, including our achievement of a cumulative three-year income position as of December 31, 2018 and forecasts of future operating results, as well as considering the utilization of net operating losses and tax credits prior to their expiration, management determined that there is sufficient positive evidence to conclude that it is more likely than not the deferred tax assets of $244.1 million are realizable and the valuation allowance was reduced accordingly. As of December 31, 2018, we continue to carry a valuation allowance of $58.1 million against our California state deferred tax assets. Prior to December 31, 2018, because of our history of operating losses, management believed that recognition of the deferred tax assets was not more likely than not (as defined in Topic 740) to be realized and, accordingly, had provided a full valuation allowance. The valuation allowance decreased by $360.8 million and $210.1 million during 2018 and 2017, respectively. At December 31, 2018, we had federal net operating loss carryforwards of approximately $614 million which expire in the years 2031 through 2036, and federal business tax credits of approximately $102 million which expire in the years 2021 through 2038. We also had state net operating loss carryforwards of approximately $453 million, which expire in the years 2028 through 2036, and California research and development tax credits of approximately $34 million, which do not expire. Under the Internal Revenue Code and similar state provisions, certain substantial changes in our ownership could result in an annual limitation on the amount of net operating loss and credit carryforwards that can be utilized in future years to offset future taxable income. The annual limitation may result in the expiration of net operating losses and credit carryforwards before utilization. We completed a Section 382 study through December 31, 2018, and concluded that an ownership change, as defined under Section 382, had not occurred. The following table summarizes the activity related to our unrecognized tax benefits (in thousands):
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
Beginning balance | $ | 79,342 |  |  | $ | 61,809 |  |  | $ | 88,638 |
Change relating to prior year provision | (4,254 | ) |  | 247 |  |  | (29,110 | )
Change relating to current year provision | 1,083 |  |  | 17,378 |  |  | 2,304 |
Reductions based on the lapse of the applicable statutes of limitations | (111 | ) |  | (92 | ) |  | (23 | )
Ending balance | $ | 76,060 |  |  | $ | 79,342 |  |  | $ | 61,809 |
We do not anticipate that the amount of unrecognized tax benefits existing as of December 31, 2018 will significantly change over the next 12 months. As of December 31, 2018, we had $76.1 million in unrecognized tax benefits, of which $46.0 million would reduce our income tax provision and the effective tax rate, if recognized. Interest and penalties were nominal or zero for all periods presented. We have elected to record interest and penalties in the accompanying Consolidated Statements of Operations as a component of income taxes. We file U.S. and state income tax returns in jurisdictions with varying statues of limitations during which such tax returns may be audited and adjusted by the relevant tax authorities. The 1999 through 2018 tax years generally remain subject to examination by federal and most state tax authorities to the extent net operating losses and credits generated during these periods are being utilized in the open tax periods.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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