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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes At December 31, 2015, the Company had federal net operating loss carryforwards set to expire through 2036 of $537.1 million and $138.4 million of state net operating loss carryforwards. The Company also has $10.6 million of federal research and development credit carryforwards, which expire through 2036. The Company has $14.1 million of California research and development credit carryforwards that have no expiration date. Sections 382 and 383 of the U.S. tax code impose limitations (“382 and 383 limitations”) on the annual utilization of operating loss and credit carryforwards whenever a greater than fifty percent change in the ownership of a company occurs within a three year period. In addition to the annual limitations on operating loss and credit carryforwards, Section 382 can also restrict the utilization of certain post change losses if the tax basis in assets exceeds the fair value of assets (“net unrealized built in loss”) at the date of an ownership change. Companies with operating loss and credit carryforwards are required to test the cumulative three year change whenever there is an equity transaction that impacts the ownership of holders of more than five percent of the Company’s stock. During 2015, the Company completed a rollforward analysis through December 31, 2014. As a result of the rollforward analysis, it was determined that no additional ownership changes occurred at the Company within the meaning of section 382 since June 20, 2007. Future changes in the ownership of the Company could place additional restrictions on the Company’s ability to utilize operating loss and credit carryforwards arising through December 31, 2015. The components of the income tax expense (benefit) for continuing operations are as follows (in thousands):
| Year Ended December 31,
| 2015 Restated |  | 2014 |  | 2013 |
Current expense (benefit): |  |  |  |  |  |
Federal | $ | 11 |  |  | $ | 15 |  |  | $ | — |  |
State | 7 |  |  | 19 |  |  | 33 |  |
| 18 |  |  | 34 |  |  | 33 |  |
Deferred expense (benefit): |  |  |  |  |  |
Federal | (167,413 | ) |  | 406 |  |  | 404 |  |
State | (24,720 | ) |  | (30 | ) |  | (63 | ) |
| $ | (192,115 | ) |  | $ | 410 |  |  | $ | 374 |  |
In periods prior to the year ended December 31, 2015, the Company concluded that a full valuation allowance was necessary to offset its deferred tax assets, due to a history of operating losses and other key operating factors. As of September 30, 2015, the Company concluded that it was more likely than not that a substantial portion of its deferred tax assets would be realized through future taxable income. The Company's income tax provision for the year ended December 31, 2015, included a discrete income tax benefit related to the release of a majority of the Company’s valuation allowance and various adjustments to its deferred tax assets, including studies validating the Company’s tax attributes and adjustments resulting from the tax return filings during the quarter. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2015 and 2014 are shown below. The Company assesses the positive and negative evidence to determine if sufficient future taxable income will be generated to use the existing deferred tax assets. During the third quarter of the year, the Company's evaluation of evidence resulted in management concluding that the majority of the Company's deferred tax assets will be realized. However, the Company maintains a valuation allowance to offset certain net deferred tax assets as management believes realization of such assets are uncertain as of December 31, 2015, 2014 and 2013. The valuation allowance decreased $230.7 million in 2015, decreased $9.8 million in 2014 and decreased $5.4 million in 2013.
| December 31,
| 2015 Restated |  | 2014
| (in thousands)
Deferred assets: |  |  |
Net operating loss carryforwards | $ | 160,595 |  |  | $ | 193,747 |
Research and AMT credit carryforwards | 25,613 |  |  | 28,288 |
Fixed assets and intangibles | 8,839 |  |  | 13,237 |
Accrued expenses | 1,523 |  |  | 1,579 |
Contingent liabilities | 707 |  |  | 579 |
Deferred revenue | 3 |  |  | 771 |
Present value of royalties | 3,007 |  |  | 11,686 |
Organon termination asset | — |  |  | (111 | )
Organon termination liability | — |  |  | 111 |
Deferred rent | 68 |  |  | 730 |
Other | 17,281 |  |  | 5,780 |
| 217,636 |  |  | 256,397 |
Valuation allowance for deferred tax assets | (9,066 | ) |  | (240,420 | )
Net deferred tax assets | $ | 208,570 |  |  | $ | 15,977 |
Deferred tax liabilities: |  |  |
Retrophin fair value adjustment | $ | (1,256 | ) |  | $ | (1,396 | )
Convertible debt | (1,844 | ) |  | (1,436 | )
Identified intangibles | (12,770 | ) |  | (13,146 | )
Identified indefinite lived intangibles | (3,617 | ) |  | (3,048 | )
Total | $ | 189,083 |  |  | $ | (3,049 | )
As of December 31, 2015 and 2014, the Company had not recognized as a deferred tax asset $11.5 million and $8.1 million, respectively of unrealized excess tax benefits from stock-based compensation. When realized and the valuation allowance is reversed, such benefits will be credited directly to additional paid-in capital. Changes to the valuation allowance allocated directly to other comprehensive income were $0 million, $0.7 million and $1.0 million for 2015, 2014 and 2013, respectively. A reconciliation of income tax expense (benefit) from continuing operations to the amount computed by applying the statutory federal income tax rate to the net income (loss) from continuing operations is summarized as follows:
| Year Ended December 31,
| 2015 Restated |  | 2014 |  | 2013
Amounts computed at statutory federal rate | $ | (13,198 | ) |  | $ | (3,843 | ) |  | $ | (3,131 | )
State taxes net of federal benefit | (386 | ) |  | (697 | ) |  | (293 | )
Meals & entertainment | (16 | ) |  | (9 | ) |  | (10 | )
Imputed interest | 161 |  |  | (53 | ) |  | (285 | )
Section 162(m) limitation | (197 | ) |  | (490 | ) |  | — |
Contingent liabilities | (1,684 | ) |  | (1,748 | ) |  | (2,027 | )
Stock-based compensation | (140 | ) |  | (89 | ) |  | 556 |
Expired NOLs | (232 | ) |  | (88 | ) |  | — |
Research and development credits | (304 | ) |  | 113 |  |  | 4,581 |
Change in uncertain tax positions | (27,188 | ) |  | (7 | ) |  | (364 | )
Rate change for changes in state law | 5,756 |  |  | (119 | ) |  | (901 | )
Increase in deferred tax assets from completion of 382 analysis | (3,329 | ) |  | (43 | ) |  | (786 | )
Avinza true up | 2,107 |  |  | — |  |  | — |
Change in valuation allowance | 231,370 |  |  | 7,243 |  |  | 3,509 |
Other | (605 | ) |  | (580 | ) |  | (1,223 | )
| $ | 192,115 |  |  | $ | (410 | ) |  | $ | (374 | )
The Company accounts for income taxes by evaluating a probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company’s remaining liabilities for uncertain tax positions are presented net of the deferred tax asset balances on the accompanying consolidated balance sheet. A reconciliation of the amount of unrecognized tax benefits at December 31, 2015 and 2014 is as follows (in thousands):
Balance at December 31, 2013 | $ | 8,504 |
Additions based on tax positions related to the current year | 40 |
Additions for tax positions of prior years | (20 | )
Balance at December 31, 2014 | $ | 8,524 |
Additions based on tax positions related to the current year | 154 |
Additions based on tax positions related to prior years | 28,224 |
Reductions for tax positions of prior years | (450 | )
Balance at December 31, 2015 | $ | 36,452 |
Included in the balance of unrecognized tax benefits at December 31, 2015 is $33.5 million of tax benefits that, if recognized would impact the effective rate. There are no positions for which it is reasonably possible that the uncertain tax benefit will significantly increase or decrease within twelve months. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015 and December 31, 2014, there was an accrual related to uncertain tax positions of $29,000 and $32,000, respectively. The Company files income tax returns in the United States and in various state jurisdictions with varying statutes of limitations. The federal statute of limitation remains open for the 2012 tax year to present. The state income tax returns generally remain open for the 2011 tax years through present. Changes to the valuation allowance allocated directly to equity were $0 million, $1.1 million, and $0 million for the years ended December 31, 2015, 2014, and 2013, respectively. As of December 31, 2015, approximately $4.2 million of the valuation allowance for deferred tax assets related to benefits of stock option deductions which, when recognized, will be allocated directly to paid-in-capital. For the year ended December 31, 2015, the Company has adopted ASU 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes which requires noncurrent classification of all deferred tax liabilities and assets. Under current GAAP, in a classified statement of financial position, deferred tax assets and liabilities are separated into a current amount and a non-current amount on the basis of the classification of the related asset or liability for financial reporting. Deferred tax assets and liabilities that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. On November 20, 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes which requires non-current classification of all deferred tax assets and liabilities for all public entities for annual periods beginning after December 15, 2016. ASU 2015-17 also provides for early adoption for all entities as of the beginning of an annual period. For the year ended December 31, 2015, the Company has elected to early adopt ASU 2015-17 and will present all its deferred tax assets and liabilities as non-current for the period ended December 31, 2015. The Company has applied the Standard on a prospective basis. Therefore, the classification of deferred tax assets and liabilities in periods prior to the period ended December 31, 2015 have not been changed from the original presentation.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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