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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Taxes |
Income Taxes | 13. Income Taxes For financial reporting purposes, income (loss) before income taxes includes the following components (in thousands):
|  | Years Ended December 31, |
|  | 2016 |  | 2015 |  | 2014 |
United States |  | $ | (174,913 | ) | $ | (123,697 | ) | $ | (70,030 | )
Foreign |  |  | (28,868 | ) |  | (8,421 | ) |  | (9 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total |  | $ | (203,781 | ) | $ | (132,118 | ) | $ | (70,039 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
A reconciliation of the statutory tax rates and the effective tax rates for the years ended December 31, 2016, 2015 and 2014 are as follows:
|  | Years Ended December 31, |
|  | 2016 |  | 2015 |  | 2014 |
Statutory rate |  |  | (34 | )% |  | (34 | )% |  | (34 | )%
State taxes, net of federal benefit |  |  | (5 | ) |  | (5 | ) |  | (4 | )
Permanent adjustments |  |  | 3 |  |  | 2 |  |  | 1 |
R&D credit |  |  | (3 | ) |  | (3 | ) |  | (4 | )
Foreign income tax rate differential |  |  | 2 |  |  | 1 |  |  | — |
Other |  |  | (1 | ) |  | 2 |  |  | 1 |
Valuation allowance |  |  | 36 |  |  | 37 |  |  | 38 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net |  |  | (2 | )% |  | (0 | )% |  | (2 | )%
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The Company recognized a tax benefit of $1.1 million in connection with the sale of net operating losses and research and development credits in the New Jersey Transfer Program for the year ended December 31, 2014. There were no sales of net operating losses and research and development credits for the years ended December 31, 2016 and 2015. The Company recorded an income tax benefit of $3.7 million in the Consolidated Statement of Operations for the year ended December 31, 2016. The benefit was primarily from $2.7 million in income tax benefit in connection with the reduction in state tax rates in North Carolina, and $1.2 million from reduction in its valuation allowance to reflect the income tax associated with the gain on foreign currency translation recorded in the Consolidated Statement of Comprehensive Loss for the year ended December 31, 2016. The Company did not recognize interest or penalties related to income tax during the period ended December 31, 2016 and did not accrue for interest or penalties as of December 31, 2016. The Company does not have an accrual for uncertain tax positions as of December 31, 2016. Tax returns for all years 2009 and thereafter are subject to future examination by tax authorities. Deferred income taxes reflect the net effect of temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the deferred tax assets and liabilities are as follows (in thousands):
|  | For Years Ended December 31, |
|  | 2016 |  | 2015 |
Non-current deferred tax assets |  |  |  |  |  |  |
Intellectual property |  | $ | 95,956 |  | $ | — |
Amortization/depreciation |  |  | 1,781 |  |  | 2,657 |
Research tax credit |  |  | 32,851 |  |  | 27,170 |
Net operating loss carry forwards |  |  | 253,661 |  |  | 159,889 |
Deferred revenue |  |  | 14,281 |  |  | 14,281 |
Non-cash stock issue |  |  | 11,649 |  |  | 6,767 |
Others |  |  | 3,358 |  |  | 2,964 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Gross deferred tax assets |  |  | 413,537 |  |  | 213,728 |
Deferred tax liability related to business acquisition |  |  | (173,771 | ) |  | (176,219 | )
Deferred tax liability related to royalty payable |  |  | (96,829 | ) |  | — |
Deferred tax liability related to convertible notes |  |  | (29,845 | ) |  | — |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total net deferred tax asset |  |  | 113,092 |  |  | 37,509 |
Less valuation allowance |  |  | (286,863 | ) |  | (213,728 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax assets (liability) |  | $ | (173,771 | ) | $ | (176,219 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The Company records a valuation allowance for temporary differences for which it is more likely than not that the Company will not receive future tax benefits. At December 31, 2016 and 2015, the Company recorded valuation allowances of $286.9 million and $213.7 million, respectively, representing an increase in the valuation allowance of $73.2 million in 2016 and an increase of $65.3 million in 2015, due to the uncertainty regarding the realization of such deferred tax assets, to offset the benefits of net operating losses generated during those years. The deferred tax liability related to business acquisitions pertains to the basis difference in IPR&D acquired by the Company. The Company's policy is to record a deferred tax liability related to acquired IPR&D that may eventually be realized either upon amortization of the asset when the research is completed and a product is successfully launched or the write-off of the asset if it is abandoned or unsuccessful. As of December 31, 2016, the Company had federal, state, and foreign net operating loss carry forwards ("NOLs") of approximately $637 million, $623 million, and $40 million respectively. The federal carry forward will expire in 2029 through 2036. Most of the state carry forwards generated prior to 2009 have expired through 2015. The remaining state carry forwards including those generated in 2009 through 2016 will expire in 2029 through 2036. The foreign NOLs have indefinite expiration. Utilization of NOLs may be subject to a substantial limitation pursuant to Section 382 of the Code as well as similar state statutes in the event of an ownership change. Such ownership changes have occurred in the past, and could occur again in the future As a result of these ownership changes, Section 382 places an annual limitation on the amount of NOLs that can be utilized to offset future taxable income each year, which is based on the value of the company at the change date. This limitation could result in expiration of those carry forwards before utilization. In general, an ownership change, as defined by Section 382, results from transactions that increase the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three year period. The Company completed a detailed study of its cumulative ownership changes for 2016 and determined that in 2016, there was no ownership change in excess of 50%; therefore there was no write-down to net realizable value of the federal NOLs and research and development credits subject to the 382 limitations. A tax benefit of $4.6 million associated with the exercise of stock options will be recorded in additional paid-in capital when the associated net operating loss is recognized.

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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=6907707&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=6907707&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=6907707&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=6907707&loc=d3e32537-109319 + Details
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