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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Taxes |
Income Taxes | (14) Income Taxes The components of income tax benefit (provision) are as follows:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
|  | (In thousands)
Income Tax Benefit (Provision): |  |  |  |  |  |  |  |  |
Federal |  | $ | 22,255 |  | $ | 57,547 |  | $ | 45,518
State |  |  | 6,406 |  |  | (2,479) |  |  | 7,268
Foreign |  |  | 913 |  |  | 2,448 |  |  | 1,124
Income Tax Rate Change |  |  | — |  |  | (99,528) |  |  | —
|  |  | 29,574 |  |  | (42,012) |  |  | 53,910
Deferred Tax Valuation Allowance |  |  | (28,809) |  |  | 66,294 |  |  | (53,910)
|  | $ | 765 |  | $ | 24,282 |  | $ | —
A reconciliation between the amount of reported income tax and the amount computed using the U.S. Statutory rate is as follows:
|  | 2018 |  | 2017 |  | 2016
|  | (In thousands)
Pre-Tax Loss |  | $ | (151,949) |  | $ | (117,313) |  | $ | (128,530)
Loss at Statutory Rates |  |  | (31,909) |  |  | (39,887) |  |  | (43,700)
Difference in Foreign Tax Rates |  |  | — |  |  | 326 |  |  | 150
Research and Development Credits |  |  | (2,056) |  |  | (2,847) |  |  | (5,203)
State Taxes |  |  | (6,406) |  |  | (6,283) |  |  | (7,268)
Income Tax Rate Change |  |  | — |  |  | 99,528 |  |  | —
Other |  |  | (1,175) |  |  | (321) |  |  | 2,111
Milestone Abandonment |  |  | (6,220) |  |  | — |  |  | —
Intangible Impairment |  |  | 19,105 |  |  | — |  |  | —
Recognition of APIC NOLs |  |  | — |  |  | (5,729) |  |  | —
Impact of Pass-through Entities |  |  | (913) |  |  | (2,775) |  |  | —
Change in Valuation Allowance |  |  | 28,809 |  |  | (66,294) |  |  | 53,910
Income Tax (Benefit) Provision |  | $ | (765) |  | $ | (24,282) |  | $ | —
Deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and tax basis of assets and liabilities using future expected enacted rates. The principal components of the deferred tax assets and liabilities at December 31, 2018 and 2017, respectively, are as follows:
|  | December 31, |  | December 31,
|  | 2018 |  | 2017
|  | (In thousands)
Gross Deferred Tax Assets |  |  |  |  |  |
Net Operating Loss Carryforwards |  | $ | 168,239 |  | $ | 146,228
Foreign Net Operating Loss Carryforwards |  |  | 4,485 |  |  | 3,572
Tax Credit Carryforwards |  |  | 39,761 |  |  | 36,458
Deferred Research and Development Expenses |  |  | 76,555 |  |  | 79,272
Stock-based Compensation |  |  | 11,977 |  |  | 10,718
Fixed Assets |  |  | 1,761 |  |  | 1,305
Deferred Revenue |  |  | 13 |  |  | 686
Accrued Expenses and Other |  |  | 183 |  |  | 316
|  |  | 302,974 |  |  | 278,555
Gross Deferred Tax Liabilities |  |  |  |  |  |
Other Acquired Intangibles |  |  | 120 |  |  | (1,792)
IPR&D Intangibles |  |  | (12,748) |  |  | (15,992)
Total Deferred Tax Assets and Liabilities |  |  | 290,346 |  |  | 260,771
Valuation Allowance |  |  | (293,353) |  |  | (264,543)
Net Deferred Tax Liability |  | $ | (3,007) |  | $ | (3,772)
The Company has evaluated the positive and negative evidence bearing upon the realizability of its net deferred tax assets and considered its history of losses, ultimately concluding that it is “more likely than not” that the Company will not recognize the benefits of federal, state and foreign deferred tax assets and, as such, has maintained a full valuation allowance on its deferred tax assets. During year ended December 31, 2017, the Company’s gross deferred tax assets and corresponding valuation allowance each increased by $17.7 million. This was a one-time increase due to the adoption of a new accounting standard removing the requirement to recognize excess tax benefits from the exercise of stock options in additional paid-in-capital when realized. On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted, leading to significant changes to U.S. tax law. Among other provisions, the TCJA lowered the U.S. federal corporate income tax rate from 35% to 21%, limited the deduction for net operating losses to 80% of taxable income while providing that net operating loss carryovers for years after 2017 will not expire, imposed a mandatory one-time transition tax on previously deferred foreign earnings and eliminated or reduced certain income tax deductions. As a result of the TCJA, the Company revalued its deferred tax liabilities at the new federal rate of 21%, resulting in a $6.9 million decrease and a corresponding income tax benefit. The Company also scheduled out reversals of its deferred tax assets and liabilities, determining that their reversal would create future indefinite‑lived net operating losses under the TCJA. As such, the valuation allowance was reduced relating to the remaining indefinite‑lived federal deferred tax liabilities balance, leading to an additional income tax benefit of $12.2 million. The Company’s deferred tax asset balance was also revalued at the new 21% rate resulting in a $99.5 million decrease in the balance with a corresponding decrease to the valuation allowance. Finally, the one‑time transition tax on previously deferred foreign earnings under the TCJA is not expected to impact the Company due to a net deficit in the Australian subsidiary. The Company’s accounting for the tax effects of the TCJA is complete. The net deferred tax liability of $3.0 million and $3.8 million at December 31, 2018 and 2017, respectively, relates to the temporary differences associated with the IPR&D intangible assets acquired in previous business combinations and are not deductible for tax purposes. The Company recorded an income tax benefit of $0.8 million during the year ended December 31, 2018 due to a decrease in deferred tax liabilities resulting from the partial impairment of the anti-KIT program. As of December 31, 2018, the Company had federal and state net operating loss carryforwards of $636.8 million and $532.4 million, respectively, which may be available to offset certain future income tax liabilities and begin to expire in 2019 and 2028, respectively. Of the federal net operating loss carryforwards of $636.8 million, approximately $75 million are from 2018 and have no expiration date. As of December 31, 2018, the Company also had federal and state research and development tax credit carryforwards of $31.0 million and $11.1 million, respectively, which may be available to offset future income tax liabilities and begin to expire in 2018 and 2017, respectively. Utilization of the net operating loss carryforwards and research and credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986, or Section 382, due to ownership changes that occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50% over a three‑year period. The Company has estimated the amounts of net operating loss and research and development tax credit carryforwards which will expire unutilized as a result of its estimated annual limitations under Section 382 and has excluded those amounts from the carryforward amounts disclosed above and in the deferred tax assets and liabilities table included in this footnote. The Company has concluded Section 382 studies through 2015 for Celldex generated NOLs. The Company incurred a foreign pre-tax loss of $3.0 million and $8.2 million during the years ended December 31, 2018 and 2017, respectively. Beginning with the 2016 tax returns, the Company elected to classify the Australian entity as a disregarded entity for income tax purposes. The foreign pre-tax losses have been included with the Federal net operating loss carryforwards. As of December 31, 2018 and 2017, the Company did not have any unrecognized tax benefits. Massachusetts, New Jersey, New York, Connecticut and Australia are the jurisdictions in which the Company primarily operates or has operated and has income tax nexus. The Company is not currently under examination by these or any other jurisdictions for any tax year. Generally, in U.S. federal and state taxing jurisdictions, all years which generated net operating losses and/or tax credit carryforwards remain subject to examination to the extent those carryforwards are utilized in a subsequent period.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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