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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Total income (loss) before income taxes summarized by region was as follows (in thousands):
Year Ended December 31,
202320222021
United States$348,828 $248,918 $248,071 
Foreign(499)— 447 
Net income before income taxes$348,329 $248,918 $248,518 
Significant components of our net deferred tax assets (liabilities) were as follows (in thousands).
December 31,
20232022
Deferred tax assets
Net operating loss carryforwards$32,753 $32,887 
Deferred revenue31 837 
Research and development and orphan drug credits38,192 96,133 
Share-based compensation5,024 6,353 
ASC 842 lease liability7,258 2,480 
Capitalized research expense19,543 10,168 
Transaction related expense— 2,354 
Inventory related reserves13,561 18,395 
Other, net6,715 3,054 
Total deferred tax assets
123,077 172,661 
Valuation allowance for deferred tax assets(2,588)(707)
Deferred tax assets, net of valuation allowance120,489 171,954 
Deferred tax liabilities
Non-deductible book amortization (103,492)(115,578)
Depreciation(3,522)(2,559)
ASC 842 right of use asset(8,259)(9,061)
Other, net(830)(330)
Total deferred tax liabilities(116,103)(127,528)
Net deferred tax asset $4,386 $44,426 
A valuation allowance of $2.6 million and $0.7 million has been established to offset the net DTAs as of December 31, 2023 and 2022, respectively, as realization of such assets is uncertain.
On a periodic basis, we reassess the valuation allowance of our DTAs, weighing all positive and negative evidence, to assess if it is more-likely-than-not that some or all of our DTAs will be realized. In 2021, we demonstrated profitability and cumulative pretax income and are forecasting income growth in future tax years. After assessing both the positive and negative evidence, we determined that it was more likely than not that our DTAs would be realized and released the valuation allowance in 2021.
On May 24, 2022, we acquired the outstanding shares of Antares. This transaction was treated as a non-taxable acquisition. We have increased our DTLs by approximately $119.7 million related to the acquired intellectual property and a step-up to the value of the inventory, the amortization of which will not be tax deductible.
Income tax expense (benefit) was comprised of the following components (in thousands):
Year Ended December 31,
202320222021
Current - federal$24,963 $6,157 $(9)
Current - state5,717 2,525 1,251 
Deferred - federal34,037 44,757 (117,925)
Deferred - state2,018 (6,650)(37,509)
Total income tax expense (benefit)
$66,735 $46,789 $(154,192)
The provision for income taxes on earnings subject to income taxes differs from the statutory federal income tax rate due to the following:
Year Ended December 31,
202320222021
Federal income tax expense
21.00 %21.00 %21.00 %
State income tax expense, net of federal income tax impact
2.76 %0.82 %2.67 %
Decrease in valuation allowance
— %(0.39)%(84.92)%
Foreign income subject to tax at other than federal statutory rate0.03 %— %0.02 %
Share-based compensation(0.21)%(0.66)%(2.50)%
Executive compensation limitation0.90 %2.61 %2.32 %
Non-deductible expenses and other0.80 %(0.40)%0.54 %
Foreign-derived intangible income(3.44)%(5.06)%(1.18)%
Transaction costs— %0.88 %— %
Research and development credits, net(2.71)%— %— %
Effective income tax rate
19.13 %18.80 %(62.05)%
As of December 31, 2023, our unrecognized tax benefit and uncertain tax positions were $21.9 million, which will impact the effective tax rate when resolved. Of the unrecognized tax benefits, we do not expect any significant changes to occur in the next 12 months. Interest and/or penalties related to uncertain income tax positions are recognized by us as a component of income tax expense. For the years ended December 31, 2023, 2022 and 2021, we recognized an immaterial amount of interest and penalties.
The following table summarizes the activity related to our unrecognized tax benefits (in thousands):
Year Ended December 31,
202320222021
Gross unrecognized tax benefits, beginning of period
$19,482 $17,692 $19,167 
Increases in tax positions for prior years1,645 — 21 
Decreases in tax positions for prior years and lapse in statute of limitations
— (1,148)(1,496)
Increases in tax positions related to business acquisition— 2,151 — 
Increases in tax positions for current year 791 787 — 
Gross unrecognized tax benefits, end of period$21,918 $19,482 $17,692 
As of December 31, 2023, we had federal, California and other state tax net operating loss carryforwards of approximately $46.8 million, $235.8 million and $66.8 million, respectively. The California and Minnesota net operating loss carryforwards begin to expire in 2037 and 2028, respectively.
As of December 31, 2023, we had federal and California research and development tax credit carryforwards of approximately $38.4 million, and $24.8 million, respectively. The federal research and development tax credits will begin to expire in 2030 unless previously utilized. The California research and development tax credits will carryforward indefinitely until utilized.
Pursuant to Internal Revenue Code Section 382, the annual use of the net operating loss carryforwards and research and development tax credits could be limited by any greater than 50% ownership change during any three-year testing period. As a result of any such ownership change, portions of our net operating loss carryforwards and research and development tax credits are subject to annual limitations. We completed an updated Section 382 analysis regarding the limitation of the net operating losses and research and development credits as of the acquisition of Antares. Based upon the analysis, we determined that ownership changes occurred in prior years; however, the annual limitations on net operating loss and research and development tax credit carryforwards will not have a material impact on the future utilization of such carryforwards.
We do not provide for U.S. income taxes on the undistributed earnings of our foreign subsidiary as it is our intention to utilize those earnings in the foreign operations for an indefinite period of time. As of December 31, 2023 and 2022, there were no undistributed earnings in foreign subsidiaries.
We are subject to taxation in the U.S. and in various state and foreign jurisdictions. Our tax years for 2008 and forward are subject to examination by the U.S., California, and Minnesota tax authorities due to the carryforward of unutilized net operating losses and research and development credits.