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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes For the years ended December 31, 2018, 2017, and 2016 the Company’s income (loss) from continuing operations before provision for income taxes was as follows:
|  | Year ended December 31,
|  | 2018 |  | 2017 |  | 2016
Domestic |  | $ | (497.1 | ) |  | $ | (76.9 | ) |  | $ | (94.4 | )
Foreign |  | 17.0 |  |  | (34.6 | ) |  | (110.6 | )
Loss before income taxes |  | $ | (480.1 | ) |  | $ | (111.5 | ) |  | $ | (205.0 | )
The components of the provision for income taxes in the years ended December 31, 2018, 2017, and 2016 were as follows:
|  | Year ended December 31,
|  | 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |  |
Federal |  | $ | (0.1 | ) |  | $ | 0.1 |  |  | $ | (1.5 | )
State |  | (0.2 | ) |  | (0.3 | ) |  | (0.6 | )
Foreign |  | (4.6 | ) |  | (2.3 | ) |  | (2.9 | )
Deferred: |  | — |  |  |  |  |
Federal |  | — |  |  | 1.4 |  |  | — |
State |  | — |  |  | — |  |  | — |
Foreign |  | 0.1 |  |  | 0.9 |  |  | (0.2 | )
Provision for income taxes |  | $ | (4.8 | ) |  | $ | (0.2 | ) |  | $ | (5.2 | )
Income tax benefit attributable to loss from continuing operations differed from the amounts computed by applying the statutory U.S. federal income tax rate of 21% for 2018 and 34% for 2017 and 2016 to pretax loss from continuing operations as a result of the following:
|  | Year ended December 31,
|  | 2018 |  | 2017 |  | 2016
Tax benefit at federal statutory rate |  | $ | 100.8 |  |  | $ | 37.9 |  |  | $ | 69.7 |
State taxes, net of federal benefit |  | 10.7 |  |  | 1.7 |  |  | 2.2 |
Foreign rate differential |  | 1.8 |  |  | (12.3 | ) |  | (38.8 | )
Research and other credits |  | 86.5 |  |  | 25.4 |  |  | 12.6 |
Permanent differences |  | (18.4 | ) |  | (9.0 | ) |  | (3.5 | )
Tax Cuts and Jobs Act impact |  | — |  |  | (61.7 | ) |  | — |
Change in valuation allowance |  | (240.7 | ) |  | 38.9 |  |  | (40.7 | )
Stock-based compensation |  | 57.3 |  |  | (20.1 | ) |  | (4.8 | )
Other nondeductible items |  | (2.8 | ) |  | (1.0 | ) |  | (1.9 | )
Provision for income taxes |  | $ | (4.8 | ) |  | $ | (0.2 | ) |  | $ | (5.2 | )
The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2018 and 2017 were as follows:
|  | As of December 31,
|  | 2018 |  | 2017
Deferred tax assets: |  |  |  |
Net operating loss carryforwards |  | $ | 264.8 |  |  | $ | 119.6 |
Research credit carryforwards |  | 157.3 |  |  | 67.9 |
Stock-based compensation |  | 11.1 |  |  | 20.0 |
Accruals and reserves |  | 42.0 |  |  | 34.0 |
Fixed assets and intangible assets |  | 0.7 |  |  | — |
Other |  | 1.1 |  |  | — |
Gross deferred tax assets |  | 477.0 |  |  | 241.5 |
Valuation allowance |  | (476.0 | ) |  | (233.7 | )
Total deferred tax assets, net of valuation allowance |  | 1.0 |  |  | 7.8 |
Deferred tax liabilities: |  |  |  |
Fixed assets and intangible assets |  | — |  |  | 6.6 |
Other |  | — |  |  | 0.4 |
Total deferred tax liability |  | — |  |  | 7.0 |
Net deferred tax assets |  | $ | 1.0 |  |  | $ | 0.8 |
For the years ended December 31, 2018 and 2017, based on all available objective evidence, including the existence of cumulative losses, the Company determined that it was not more likely than not that the U.S., Ireland, and Israel net deferred tax assets were fully realizable as of December 31, 2018 and 2017. Accordingly, the Company established a full valuation allowance against its U.S. and Ireland deferred tax assets and a partial valuation allowance against its Israeli deferred tax assets. As of December 31, 2018, the Company had $923.6 million of federal, $403.5 million of state, and $288.0 million of foreign net operating loss carryforwards available to reduce future taxable income. Of the federal net operating loss carryforwards, $307.4 million will begin to expire in 2031 and $616.2 million will carryforward indefinitely, while state net operating losses begin to expire in 2029. As of December 31, 2018, the Company had research credit carryforwards of $145.0 million and $76.8 million for federal and state income tax purposes, respectively, of which $36.1 million and $19.1 million is the unrecognized tax benefit portion related to the research credit carryforwards for federal and state, respectively. The federal credit carryforward will begin to expire in 2027. The state research credits have no expiration date. The Company also had $3.7 million of state enterprise zone credit carryforwards, which will begin to expire in 2023. As of December 31, 2018, the Company also had $265.1 million of foreign net operating loss carryforwards available to reduce future taxable income, which will carryforward indefinitely. In addition, the Company had $22.9 million of foreign acquired net operating losses, which will carryforward indefinitely. Under Section 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change attributes, such as research tax credits, to offset its post-change income may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. The Company performed a study for the period through December 31, 2018, and determined that no ownership changes exceeding 50 percentage points have occurred. The Company’s ability to use net operating loss and tax credit carryforwards to reduce future taxable income and liabilities may be subject to annual limitations as a result of ownership changes from January 1, 2019, and subsequent years. As of December 31, 2018, the balance of unrecognized tax benefits was $59.8 million of which $4.5 million, if recognized, would affect the effective tax rate and $55.3 million would result in adjustment to deferred tax assets with corresponding adjustments to the valuation allowance. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
|  | Year ended December 31,
|  | 2018 |  | 2017 |  | 2016
Balance of gross unrecognized tax benefits at the beginning of the fiscal year |  | $ | 25.6 |  |  | $ | 15.7 |  |  | $ | 7.9 |
Gross increases related to prior period tax positions |  | 1.1 |  |  | — |  |  | 2.2 |
Gross increases related to current period tax positions |  | 33.1 |  |  | 9.9 |  |  | 5.6 |
Balance of gross unrecognized tax benefits at the end of the fiscal year |  | $ | 59.8 |  |  | $ | 25.6 |  |  | $ | 15.7 |
The Company recognizes interest and/or penalties related to income tax matters as a component of income tax expense. As of December 31, 2018, the amount of accrued interest and penalties related to uncertain tax positions was $1.3 million. Interest and penalties recognized for the year ended December 31, 2018, 2017, and 2016 was $0.7 million, $0.2 million, and $0.4 million respectively. The Company files income tax returns in the U.S. federal, multiple states, and foreign jurisdictions. All of the Company’s tax years from 2007 remain open for examination by the federal and state authorities, and from 2013 by foreign authorities. The Company generally does not provide deferred income taxes for the undistributed earnings of its foreign subsidiaries as the Company intends to reinvest such earnings indefinitely. Should circumstances change and it becomes apparent that some or all of the undistributed earnings will no longer be indefinitely reinvested, the Company will accrue for income taxes not previously recognized. As of December 31, 2018, there were no cumulative undistributed earnings in its Irish subsidiary and, as a result, there were no unrecorded deferred tax liabilities. The amount of undistributed earnings in the Company’s other foreign subsidiaries, if any, are immaterial. Impact of the Tax Cuts and Jobs Act The Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017 and provides for significant changes to U.S. tax law. Among other provisions, the Tax Reform Act reduces the U.S. corporate income tax rate to 21% effective in 2018. The Tax Reform Act also contains a number of provisions that may impact the Company in future years. At December 31, 2017, the Company had not completed its accounting for all of the enactment-date income tax effects of the Tax Reform Act for remeasurement of deferred tax assets and liabilities, one-time transition tax, and tax on global intangible low-taxed income. During the twelve months ended December 31, 2018 the Company completed the accounting for all of the enactment-date income tax effects of the Tax Reform Act. Upon completing the analysis, the Company has recognized no material adjustments to its provisional amounts recorded for the year ended December 31, 2017. The Company will continue to monitor ongoing guidance in this area, as the U.S. Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the Tax Reform Act will be applied or otherwise administered that is different from the Company’s interpretation. As a result of the reduction in the corporate rate, the Company has remeasured its U.S. deferred tax assets and liabilities as of December 31, 2017 to reflect the lower rate expected to apply when these temporary differences reverse. As of December 31, 2017, the Company determined the remeasurement resulted in a reduction in deferred tax assets of $63.1 million, which was fully offset by a corresponding change to the Company’s valuation allowance. There were no material changes from provisional amounts recorded for the year ended December 31, 2017. The Tax Reform Act repealed the corporate alternative minimum tax (“AMT”) effective beginning in 2018 and permits AMT credit carryforwards to be refunded to the extent unused through 2021. Since the Company does not anticipate the use of these credits to reduce future federal taxes, it recognized an income tax benefit and established an income tax receivable to reflect anticipated refunds of $1.4 million for its 2016 AMT credit carryforward during the year ended December 31, 2017. There were no material changes from provisional amounts recorded for the year ended December 31, 2017. The Tax Reform Act also provides for a transition to a new territorial system of taxation and generally requires companies to include certain untaxed foreign earnings of non-U.S. subsidiaries into taxable income in 2017 (“Transition Tax”). As a result of the cumulative deficits in the Company’s foreign subsidiaries, the Company has no Transition Tax inclusion. The Tax Reform Act subjects a US shareholder to current tax on global intangible low-taxed income (GILTI) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. The Company has elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. As a result of the tested losses in its foreign subsidiaries, under GILTI regulations, the Company has no GILTI inclusion for the year ended 2018.

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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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