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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of the income tax expense (benefit) for continuing operations are as follows (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Current expense (benefit): |  |  |  |  |
Federal | $ | 10,889 |  |  | $ | 89,471 |  |  | $ | — |
State | 589 |  |  | 3,103 |  |  | 424 |
Foreign | 23 |  |  | (66) |  |  | (158) |
| 11,501 |  |  | 92,508 |  |  | 266 |
Deferred expense (benefit): |  |  |  |  |
Federal | (15,672) |  |  | 74,627 |  |  | 29,928 |
State | (3,382) |  |  | 202 |  |  | (185) |
| $ | (7,553) |  |  | $ | 167,337 |  |  | $ | 30,009 |
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 (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Tax at federal statutory rate | $ | (2,213) |  |  | $ | 167,294 |  |  | $ | 36,400 |
State, net of federal benefit | (1,456) |  |  | 2,466 |  |  | 1,635 |
Contingent liabilities | (278) |  |  | 18 |  |  | 948 |
Share-based compensation | (362) |  |  | (819) |  |  | (8,131) |
FDII | (1,652) |  |  | (402) |  |  | — |
Research and development credits | (699) |  |  | (879) |  |  | (2,758) |
Change in uncertain tax positions | (650) |  |  | 441 |  |  | 858 |
Rate change for changes in federal or state law | (173) |  |  | (210) |  |  | 178 |
Provision to return adjustments | (4,803) |  |  | (184) |  |  | (150) |
Foreign tax differential on income/loss of foreign subsidiaries | (3,839) |  |  | 57 |  |  | (14) |
Change in valuation allowance | (121,876) |  |  | (1,193) |  |  | (4,225) |
Sale of Vernalis R&D | 127,372 |  |  | — |  |  | — |
Expired NOLs and credits | — |  |  | — |  |  | 3,054 |
Change in derivatives | — |  |  | — |  |  | 615 |
Other | 3,076 |  |  | 748 |  |  | 1,599 |
| $ | (7,553) |  |  | $ | 167,337 |  |  | $ | 30,009 |
We remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. Significant components of our deferred tax assets and liabilities as of December 31, 2020 and 2019 are shown below. We assess the positive and negative evidence to determine if sufficient future taxable income will be generated to use the existing deferred tax assets. Our evaluation of evidence resulted in management concluding that the majority of our deferred tax assets will be realized. However, we maintain a valuation allowance to offset certain net deferred tax assets as management believes realization of such assets are uncertain as of December 31, 2020, 2019 and 2018. The valuation allowance decreased $116.5 million in 2020, increased $136.9 million in 2019 and decreased $2.5 million in 2018. We offset all deferred tax assets and liabilities by jurisdiction, as well as any related valuation allowance, and present them on our consolidated balance sheet as a non-current deferred income tax asset or liability (as applicable). Deferred tax assets (liabilities) are comprised of the following:
| December 31,
| 2020 |  | 2019
| (in thousands)
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 64,147 |  |  | $ | 150,727 |
Research credit carryforwards | 19,623 |  |  | 14,843 |
Stock Compensation | 11,994 |  |  | 9,544 |
Other | 13,120 |  |  | 10,602 |
| 108,884 |  |  | 185,716 |
Valuation allowance for deferred tax assets | (24,858) |  |  | (141,338) |
Net deferred tax assets | $ | 84,026 |  |  | $ | 44,378 |
Deferred tax liabilities: |  |  |
Identified intangibles | (119,381) |  |  | (40,768) |
Other | (4,923) |  |  | (10,939) |
Net deferred tax liabilities | $ | (124,304) |  |  | $ | (51,707) |
Deferred income taxes, net | $ | (40,278) |  |  | $ | (7,329) |
As of December 31, 2020, we had federal net operating loss carryforwards set to expire through 2037 of $162.4 million and $129.3 million of state net operating loss carryforwards that begin to expire in 2031. We also have $9.2 million of federal research and development credit carryforwards, which expire through 2040. We have $23.1 million of California research and development credit carryforwards that have no expiration date. In addition, we have approximately $110.1 million of non-U.S. net operating loss carryovers and approximately $17.6 million of non-U.S. capital loss carryovers that have no expiration date. At December 31, 2019 we had approximately $713.8 million of non-U.S. net operating loss carryovers and approximately $14.6 million of non-U.S. capital loss carryovers. The year over year decrease in non-U.S. deferred tax assets was attributable to the sale of Vernalis in December 2020. The remaining non-U.S. deferred tax assets as of December 31, 2020 were attributable to the portion of the Vernalis business that we did not sell. We have a full valuation allowance against these non-U.S. tax attributes. See detail in “Note (2), Sale of Vernalis R&D and Promacta License." Pursuant to Section 382 and 383 of the Internal Revenue Code of 1986, as amended, utilization of our net operating losses and credits may be subject to annual limitations in the event of any significant future changes in its ownership structure. These annual limitations may result in the expiration of net operating losses and credits prior to utilization. The deferred tax assets as of December 31, 2020 are net of any previous limitations due to Section 382 and 383. We account 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. Our 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, 2020, 2019 and 2018 is as follows (in thousands):
| December 31,
| 2020 |  | 2019 |  | 2018
Balance at beginning of year | $ | 28,736 |  |  | $ | 30,289 |  |  | $ | 29,363 |
Additions based on tax positions related to the current year | 3,911 |  |  | 543 |  |  | 1,247 |
Additions for tax positions of prior years | 179 |  |  | — |  |  | 336 |
Reductions for tax positions of prior years | (955) |  |  | (2,096) |  |  | (657) |
Balance at end of year | $ | 31,871 |  |  | $ | 28,736 |  |  | $ | 30,289 |
Included in the balance of unrecognized tax benefits at December 31, 2020 is $30.2 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. We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2020 and December 31, 2019, we recognized an immaterial amount of interest and penalties. We file income tax returns in the United States, various state jurisdictions, United Kingdom, and Canada with varying statutes of limitations. The federal statute of limitation remains open for the 2017 tax year to the present. The state income tax returns generally remain open for the 2016 tax year through the present. Net operating loss and research credit carryforwards arising prior to these years are also open to examination if and when utilized. We are subject to taxation in the U.S. and various states and foreign jurisdictions. With few exceptions, as of December 31, 2020, we are no longer subject to state, local or foreign examinations by tax authorities for tax years before 2016 and we are no longer subject to U.S. federal income or payroll tax examinations for tax years before 2017. No tax returns are currently under examination by any tax authorities. Net operating loss and research credit carryforwards arising prior to these years are also open to examination if and when utilized. We believe our reserve for unrecognized tax benefits and contingent tax issues is adequate with respect to all open years.

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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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