v3.19.3.a.u2

Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Loss before (benefit from) provision for income taxes for the years ended December 31, 2019, 2018 and 2017 consist of the following (in thousands):
| Years Ended December 31,
| 2019 |  | 2018 |  | 2017
United States | $ | (508,595 | ) |  | $ | (380,473 | ) |  | $ | (247,784 | )
Foreign | (6,121 | ) |  | (3,935 | ) |  | (8,212 | )
Loss before (benefit from) provision for income taxes | $ | (514,716 | ) |  | $ | (384,408 | ) |  | $ | (255,996 | )
The (benefit from) provision for income taxes for the years ended December 31, 2019, 2018 and 2017 consist of the following components (in thousands):
| Years Ended December 31,
| 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
Federal | $ | — |  |  | $ | (26 | ) |  | $ | (252 | )
State | 505 |  |  | 352 |  |  | 172 |
Total current | 505 |  |  | 326 |  |  | (80 | )
Deferred: |  |  |  |  |
Federal | (1,200 | ) |  | — |  |  | — |
Total deferred | (1,200 | ) |  | — |  |  | — |
Total (benefit from) provision for income taxes | $ | (695 | ) |  | $ | 326 |  |  | $ | (80 | )
The reconciliation of the U.S. statutory income tax rate to our effective tax rate for the years ended December 31, 2019, 2018 and 2017 are as follows:
| Years Ended December 31,
| 2019 |  | 2018 |  | 2017
Tax effected at statutory rate | 21.0 | % |  | 21.0 | % |  | 34.0 | %
State taxes, net of federal benefit | 7.9 | % |  | 6.3 | % |  | 8.5 | %
Non-deductible items | 1.6 | % |  | 0.0 | % |  | (1.3 | )%
Change in valuation allowance | (33.0 | )% |  | (28.5 | )% |  | (20.4 | )%
Federal research and development credits | 2.5 | % |  | 1.5 | % |  | 4.8 | %
Foreign tax rate differential | (0.2 | )% |  | (0.2 | )% |  | (1.1 | )%
Impact of federal rate change on net deferred taxes | 0.0 | % |  | 0.0 | % |  | (25.0 | )%
Other | 0.2 | % |  | (0.2 | )% |  | 0.5 | %
Effective tax rate | 0.0 | % |  | (0.1 | )% |  | 0.0 | %
The significant components of our deferred tax assets and tax liabilities as of December 31, 2019 and 2018 are as follows (in thousands):
| December 31,
| 2019 |  | 2018
Deferred tax assets: |  |  |
Net operating loss carry-forwards | $ | 268,173 |  |  | $ | 114,932 |
Stock-based compensation | 43,978 |  |  | 33,138 |
Capitalized licenses, R&D and start-up costs | 19,891 |  |  | 22,143 |
Tax credit carry-forwards | 77,222 |  |  | 53,617 |
Accrued expenses | 7,377 |  |  | 16,443 |
Deferred revenue | 53,475 |  |  | 71,209 |
Operating lease liabilities | 26,571 |  |  | — |
Lease financing obligation | 10,570 |  |  | 9,149 |
Other | 11 |  |  | 2,870 |
Total gross deferred tax assets | 507,268 |  |  | 323,501 |
Less: valuation allowance | (470,753 | ) |  | (308,273 | )
Total deferred tax assets, net of valuation allowance | 36,515 |  |  | 15,228 |
Deferred tax liabilities: |  |  |
Financing right-of-use assets | (2,612 | ) |  | — |
Operating right-of-use assets | (24,944 | ) |  | — |
Fixed assets | (8,959 | ) |  | (15,228 | )
Total deferred tax liabilities | (36,515 | ) |  | (15,228 | )
Net deferred tax assets | $ | — |  |  | $ | — |
We have evaluated the positive and negative evidence bearing upon the realization of our deferred tax assets, including our history of losses and in accordance with the applicable accounting standards, has fully reserved the net deferred tax asset. We concluded that realization of our net deferred tax assets is not more-likely-than-not to be realized. The valuation allowance increased by $162.5 million in the year ended December 31, 2019, primarily due to the increase in net operating loss carry-forwards, research and development tax credits, and stock-based compensation. At December 31, 2019, we had approximately $981.8 million and $978.8 million of federal and state net operating loss carry-forwards, respectively, of which $380.1 million of federal and $978.8 million of state loss carry-forwards begin to expire in 2030. Additionally, $601.7 million of federal net operating loss carry-forward will carry forward indefinitely. At December 31, 2019 we also had federal and state research and development credit carry-forwards of approximately $45.6 million and $23.9 million, which begin to expire in 2030 and 2029, respectively. At December 31, 2019, we also had federal orphan drug and state investment tax credit carry-forwards of approximately $1.5 million and $5.9 million which begin to expire in 2039 and 2020, respectively. Upon adoption of ASC 606 (Note 2), we recorded a cumulative-effect adjustment of $28.0 million to the opening balance of accumulated deficit as of January 1, 2019 with a decrease in deferred revenue of $30.7 million and a decrease in accounts receivable of $2.7 million. As a result of the cumulative decrease in deferred revenue, our corresponding deferred tax asset decreased by $8.4 million, which was offset by a corresponding decrease to our valuation allowance. Utilization of the net operating loss (NOL) and tax credit carry-forwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously, or that could occur in the future, as provided by Section 382 of the Internal Revenue Code of 1986, as amended, or Section 382, as well as similar state provisions and other provisions of the Internal Revenue Code. Ownership changes may limit the amount of NOLs and tax credit carry-forwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions that increase the ownership of 5% shareholders in the stock of a corporation by more than 50% in the aggregate over a three-year period. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside our control. We file income tax returns in the United States and the Commonwealth of Massachusetts. All tax years since the date of our incorporation remain open to examination by the major taxing jurisdictions (state and federal) to which we are subject, as carry-forward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service (IRS) or other authorities if they have or will be used in a future period. We are not currently under examination by the IRS, or any other jurisdictions, for any tax year. We recognize, in our financial statements, the effect of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. A reconciliation of the beginning and ending amounts of unrecognized tax benefits during the years ended December 31, 2019 and 2018 are as follows (in thousands):
Balance as of December 31, 2017 | $ | 940 |
Decrease due to prior positions | (799 | )
Increase due to current year tax position | — |
Balance as of December 31, 2018 | 141 |
Decrease due to prior positions | — |
Increase due to current year tax positions | — |
Balance as of December 31, 2019 | $ | 141 |
Unrecognized tax benefits may change during the next twelve months for items that arise in the ordinary course of business. We do not anticipate a material change to our unrecognized tax benefits over the next twelve months that would have an adverse effect on our consolidated operating results. We recognize interest and penalties, if applicable, related to uncertain tax positions as a component of income tax expense; however, there have been none to date.

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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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