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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following table presents components of the Company’s provision for income taxes as for the period presented (in thousands):
| December 31,
| 2020 |  | 2019 |  | 2018
Current expense (benefit): |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | 181 |  |  | — |  |  | — |
Foreign | 59 |  |  | 68 |  |  | 80 |
Total current tax expense (benefit) | 240 |  |  | 68 |  |  | 80 |
Deferred expense (benefit): |  |  |  |  |
Federal | — |  |  | — |  |  | — |
State | — |  |  | — |  |  | — |
Foreign | (11) |  |  | (3) |  |  | (36) |
Total deferred tax expense (benefit) | (11) |  |  | (3) |  |  | (36) |
Total Tax Expense (benefit) | $ | 229 |  |  | $ | 65 |  |  | $ | 44 |
The following table presents a reconciliation of the tax expense computed at the statutory federal rate and the Company’s tax expense for the period presented (in thousands):
| December 31,
| 2020 |  | 2019 |  | 2018
Tax at statutory federal rate | $ | (9,172) |  |  | $ | (11,446) |  |  | $ | (10,570) |
Stock-based compensation | (20,762) |  |  | (5,560) |  |  | (8,557) |
Meals and Entertainment | 177 |  |  | 409 |  |  | 309 |
Other | 805 |  |  | 614 |  |  | 148 |
Tax credits | (1,426) |  |  | (1,128) |  |  | (1,015) |
2017 Tax Act | — |  |  | — |  |  | 44 |
Change in valuation allowance | 30,607 |  |  | 17,176 |  |  | 19,685 |
Provision for income taxes | $ | 229 |  |  | $ | 65 |  |  | $ | 44 |
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
| December 31,
| 2020 |  | 2019
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 91,034 |  |  | $ | 64,648 |
Tax credit carryforwards | 7,110 |  |  | 5,601 |
Share-based compensation | 8,831 |  |  | 5,932 |
Allowances and other | 14,996 |  |  | 11,443 |
Lease obligation | 22,624 |  |  | 23,869 |
Total deferred tax assets | 144,595 |  |  | 111,493 |
Valuation allowance | (123,803) |  |  | (88,433) |
Net deferred tax assets | 20,792 |  |  | 23,060 |
Deferred Tax Liabilities: |  |  |
Depreciation and Amortization | (108) |  |  | (850) |
Right of use asset | (20,634) |  |  | (22,171) |
Total deferred tax liability | (20,742) |  |  | (23,021) |
Total deferred tax assets | $ | 50 |  |  | $ | 39 |
Due to the uncertainties surrounding the realization of deferred tax assets through future taxable income, the Company has provided a full valuation allowance against its U.S. deferred tax assets, and, therefore, no benefit has been recognized for the net operating loss carryforwards and other deferred tax assets. The U.S. valuation allowance increased by $35.4 million and $22.0 million for the years ended December 31, 2020 and December 31, 2019, respectively. The current year change in the U.S. valuation allowance is primarily related to the increase in net operating loss carryforwards generated during the year. The Company recorded an immaterial deferred tax asset related to the Company’s foreign operations in the United Kingdom. The valuation allowance for deferred tax assets consisted of the following activity for the years ended December 31, 2020, 2019 and 2018 (in thousands):
| Balance at beginning of year |  | Additions |  | Deductions |  | Balance at end of year
Year Ended December 31, 2018 | $ | 44,321 |  |  | $ | 22,114 |  |  | $ | — |  |  | $ | 66,435 |
Year Ended December 31, 2019 | 66,435 |  |  | 21,998 |  |  | — |  |  | 88,433 |
Year Ended December 31, 2020 | $ | 88,433 |  |  | $ | 35,370 |  |  | $ | — |  |  | $ | 123,803 |
As of December 31, 2020, the Company had approximately $368.2 million of federal and $218.7 million of state net operating loss carryforwards available to offset future taxable income which expires in varying amounts beginning in 2027 and 2020 respectively. As of December 31, 2020, the Company had research tax credit carryforwards of approximately $6.9 million, and $3.1 million available to reduce future taxable income, if any, for both federal and state purposes, respectively. The federal tax credit carryforwards expire beginning in 2028 and the state tax credits can be carried forward indefinitely. Section 382 of the Internal Revenue Code, and similar state provisions, limits the use of net operating loss and tax credit carryforwards in certain situations where equity transactions result in a change of ownership as defined by Internal Revenue Code Section 382. In the event the Company should experience an ownership change, as defined, utilization of its net operating loss carryforwards and tax credits could be limited. Effective January 1, 2019, the Company adopted ASC 740-10 (formerly known as FIN 48), Accounting for Income Taxes, guidance that addresses the recognition, measurement, and disclosure of uncertain tax positions. Total unrecognized income tax benefits was $2.3 million and $1.8 million at December 31, 2020 and 2019, respectively. The Company does not anticipate the total amounts of unrecognized tax benefits will significantly increase or decrease in the next 12 months. A reconciliation of the Company’s unrecognized tax benefit amount is as follows (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Balance at beginning of year | $ | 1,842 |  |  | $ | 1,459 |  |  | $ | 943 |
Additions for tax positions taken in current year | 488 |  |  | 383 |  |  | 441 |
Increases in balance related to prior year tax positions | — |  |  | — |  |  | 75 |
Decreases in balance related to prior year tax positions | (28) |  |  | — |  |  | — |
Balance at end of year | $ | 2,302 |  |  | $ | 1,842 |  |  | $ | 1,459 |
The total amount of gross unrecognized tax benefits was $2.3 million, $1.8 million, and $1.5 million as of December 31, 2020, 2019, and 2018 respectively. None of the Company’s unrecognized tax benefits that, if recognized, would affect its effective tax rate. The Company does not anticipate the total amounts of unrecognized tax benefits will significantly increase or decrease in the next 12 months. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for taxes. Management determined that no accrual for interest or penalties was required as of December 31, 2020, 2019 and 2018. The Company files income tax returns in the U.S. and UK jurisdictions. All of the Company's tax years are open to examination by the US federal and state tax authorities. The UK is open to examination for tax years starting 2017 and forward. The Company currently has no federal, state or foreign tax examinations in progress, nor has it had any federal or state examinations since inception.

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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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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