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Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

Note 10. Income Taxes

United States and foreign (loss) income before income taxes was as follows (in thousands):

​	​	​	​	​	​	​	​	​	​	​
​	​	Year ended December 31,
​	​	2021		​	2020		​	2019
United States		$	(51,370)		$	(134,096)		$	(50,339)	​
Foreign	​		2,103	​		1,782	​		303	​
Total	​	$	(49,267)	​	$	(132,314)	​	$	(50,036)	​

​

The income tax provision (benefit) was as follows (in thousands):

​	​	​	​	​	​	​	​	​	​	​
​	​	December 31,
​	​	2021		​	2020		​	2019
Current:		​			​			​		​
Federal	​	$	—	​	$	(949)	​	$	237	​
State	​		189	​		275	​		122	​
Foreign	​		1,162	​		715	​		487	​
​	​		1,351	​		41	​		846	​
Deferred:	​	​	​	​	​	​	​	​	​	​
Federal	​		264	​		(10,098)	​		(58,368)	​
State	​		(1,234)	​		(1,952)	​		(7,938)	​
Foreign	​		(55)	​		43	​		—	​
​	​		(1,025)	​		(12,007)	​		(66,306)	​
Income tax provision (benefit)	​	$	326	​	$	(11,966)	​	$	(65,460)	​

​

The reconciliations of the U.S. federal statutory tax expense to the combined effective tax provision (benefit) are as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	Year ended
​	​	December 31,
(amounts in thousands)	​	2021	​	​	2020	​	​	2019
Statutory rate of tax benefit	$	(10,346)	​	$	(27,713)	​	$	(10,508)	​
State income taxes, net of federal benefit		(3,395)	​	​	(4,674)	​	​	(2,418)	​
Permanent and other items		4,513	​	​	263	​	​	4,371	​
Stock-based compensation		(12,310)	​	​	(3,537)	​	​	(5,006)	​
Research credits		(5,408)	​	​	(5,082)	​	​	(3,594)	​
Uncertain tax positions		2,685	​	​	3,835	​	​	1,780	​
Change in tax rate		(802)	​	​	1,303	​	​	419	​
NOL Carryback Claim	​	-	​	​	(447)	​	​	-	​
ASU 2016-09 Implementation & ASC 842 Adoption in 2019	​	-	​	​	-	​	​	(104)	​
Valuation allowance		25,389	​	​	24,086	​	​	(50,400)	​
Income tax provision (benefit)	$	326	​	$	(11,966)	​	$	(65,460)	​

​

Significant components of the Company’s net deferred tax assets at December 31, 2021 and December 31, 2020 are as follows (in thousands):

​	​	​	​	​	​	​	​
​	​	December 31,
​	​	2021		​	2020
Deferred tax assets:					​		​
Net operating loss carryforwards		$	100,464	​	$	87,684	​
Tax credits	​	​	16,968	​		14,293	​
Stock-based compensation	​	​	15,521	​	​	19,972	​
Reserves and accruals	​	​	10,241	​	​	9,013	​
Lease liability	​	​	25,188	​	​	20,434	​
Other, net	​	​	2,120	​	​	—	​
Total deferred tax assets	​	$	170,502	​	$	151,396	​
​	​	​	​	​	​	​	​
Deferred tax liabilities:	​	​	​	​	​	​	​
Depreciation and amortization	​	​	(67,641)	​	​	(76,034)	​
ROU Lease Asset	​	​	(18,747)	​	​	(17,471)	​
Convertible Notes	​	​	—	​	​	(22,252)	​
Other, net	​	​	—	​	​	(542)	​
Inventory	​	​	(59)	​	​	(59)	​
Total deferred tax liabilities	​	$	(86,447)	​	$	(116,358)	​
​	​	​	​	​	​	​	​
Valuation allowance	​		(91,373)	​		(45,551)	​
Net deferred tax liability	​	$	(7,318)	​	$	(10,513)	​

​

Based on the weight of available evidence, management has established a valuation allowance for a portion of its deferred tax assets which it expects will not be realized on a more likely than not basis. The net change in the valuation allowance was $45.8 million in 2021.

At December 31, 2021, the Company had approximately $491.4 million, $328.4 million and $12.3 million of NOL carryforwards for federal, state and foreign purposes, respectively, available to offset future taxable income. The federal NOL carryforwards incurred prior to 2018 begin to expire in 2024. Federal NOL carryforwards of $239.2 million will not expire but can only be used to offset 80 percent of future taxable income. The state and foreign NOL carryforwards begin to expire in 2022.

At December 31, 2021, the Company had federal and state R&D credit carryforwards of $35.6 million and $18.4 million, respectively. Federal credits begin to expire in 2022, state credits of $4.1 million begin to expire in 2023, and state credits of $14.3 million carry forward indefinitely.

Utilization of the NOL and tax credit carryforwards will be subject to annual limitations under IRC Section 382 and Section 383 due to several ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL and tax credit carryforwards and other deferred tax assets that can be utilized to offset future taxable income and/or income tax liabilities. In general, all ownership changes as defined by IRC Section 382 result from transactions increasing ownership of certain stockholders in the stock of the Company by more than 50 percentage points over a three-year period.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for the years ended December 31, 2021, December 31, 2020 and December 31, 2019 excluding interest and penalties, is as follows (in thousands):

​	​	​	​	​	​	​	​	​	​
​	​	December 31,
​	​	2021		​	2020		​	2019
Balance at beginning of the year		$	22,803		$	15,076		$	13,486
Net addition for tax positions - prior years	​	​	505	​	​	4,987	​	​	230
Net additions for tax positions - current year	​	​	3,489	​		3,355	​		2,339
Subtractions from tax positions - prior years	​	​	(327)	​	​	(74)	​	​	(537)
Subtractions from tax positions - current year	​	​	(654)	​	​	(541)	​	​	(442)
Balance at end of the year	​	$	25,816	​	$	22,803	​	$	15,076

​

As of December 31, 2021, approximately $0.5 million of unrecognized tax benefits would reduce the Company’s annual effective tax rate if recognized.

The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of its income tax provision (benefit). There was no accrued interest and penalties associated with uncertain tax positions as of December 31, 2021, December 31, 2020 and December 31, 2019. It is not anticipated that there will be a significant change in the unrecognized tax benefits over the next 12 months.

Due to the Company’s NOL carryforwards, its federal, state and foreign income tax returns are open to examination by the Internal Revenue Service (IRS) and other taxing jurisdictions for all years since 2002. In November 2020, the IRS concluded its examination of the Company’s 2017 federal income tax return with no proposed adjustments.

There are no cumulative earnings in the Company’s foreign subsidiaries as of December 31, 2021 that would be subject to U.S. income tax or foreign withholding tax. The Company plans to indefinitely reinvest any future earnings of its foreign subsidiaries.

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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.

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