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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Taxes |
Income Taxes | (15) Income Taxes The components of income tax benefit (provision) are as follows:
|  | Year Ended December 31,
|  | 2020 |  | 2019 |  | 2018
|  | (In thousands)
Income tax benefit (provision): |  |  |  |  |  |  |  |  |
Federal |  | $ | 16,615 |  | $ | 13,869 |  | $ | 22,255
State |  |  | 5,802 |  |  | 2,170 |  |  | 6,406
Foreign |  |  | — |  |  | — |  |  | 913
Expiration of NOLs and R&D credit |  |  | (20,294) |  |  | (18,966) |  |  | —
|  |  | 2,123 |  |  | (2,927) |  |  | 29,574
Deferred tax valuation allowance |  |  | (956) |  |  | 2,927 |  |  | (28,809)
|  | $ | 1,167 |  | $ | — |  | $ | 765
A reconciliation between the amount of reported income tax and the amount computed using the U.S. Statutory rate is as follows:
|  | 2020 |  | 2019 |  | 2018
|  | (In thousands)
Pre-tax loss |  | $ | (60,947) |  | $ | (50,878) |  | $ | (151,949)
Loss at statutory rates |  |  | (12,799) |  |  | (10,684) |  |  | (31,909)
Research and development credits |  |  | (1,778) |  |  | (1,902) |  |  | (2,056)
State taxes |  |  | (5,802) |  |  | (2,170) |  |  | (6,406)
Other |  |  | (1,152) |  |  | (1,011) |  |  | (1,175)
Change in fair value remeasurement of contingent consideration |  |  | (886) |  |  | (272) |  |  | (6,220)
Intangible impairment |  |  | — |  |  | — |  |  | 19,105
Impact of pass-through entities |  |  | — |  |  | — |  |  | (913)
Expiration of NOLs and R&D credit |  |  | 20,294 |  |  | 18,966 |  |  | —
Change in valuation allowance |  |  | 956 |  |  | (2,927) |  |  | 28,809
Income tax (benefit) provision |  | $ | (1,167) |  | $ | — |  | $ | (765)
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, 2020 and 2019, respectively, are as follows:
|  | December 31, |  | December 31,
|  | 2020 |  | 2019
|  | (In thousands)
Gross deferred tax assets |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 174,369 |  | $ | 172,745
Foreign net operating loss carryforwards |  |  | — |  |  | —
Tax credit carryforwards |  |  | 44,936 |  |  | 42,642
Deferred research and development expenses |  |  | 63,215 |  |  | 70,042
Stock-based compensation |  |  | 13,196 |  |  | 12,651
Fixed assets |  |  | 1,303 |  |  | 1,759
Accrued expenses and other |  |  | 325 |  |  | 328
|  |  | 297,344 |  |  | 300,167
Gross deferred tax liabilities |  |  |  |  |  |
IPR&D intangibles |  |  | (7,802) |  |  | (12,748)
Total deferred tax assets and liabilities |  |  | 289,542 |  |  | 287,419
Valuation allowance |  |  | (291,382) |  |  | (290,426)
Net deferred tax liability |  | $ | (1,840) |  | $ | (3,007)
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. In response to COVID-19, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020. Among other provisions, the CARES Act included (i) the ability to use net operating losses to offset income without the 80% taxable income limitation enacted as part of the Tax Cuts and Jobs Act (“TCJA”) for net operating losses incurred in the 2018, 2019 or 2020 tax years; and (ii) the ability to claim a current deduction for interest expense up to 50% of adjusted taxable income for the 2019 and 2020 tax years (rather than 30% of adjusted taxable income pursuant to the TCJA). We do not expect that any of the provisions of the CARES Act will result in a material impact to the financial statements. The net deferred tax liability of $1.8 million and $3.0 million at December 31, 2020 and 2019, 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 $1.2 million during the year ended December 31, 2020 due to a decrease in deferred tax liabilities resulting from the impairment of the CDX-3379 IPR&D asset in the second quarter of 2020 and the partial impairment of the TAM program IPR&D asset in the fourth quarter of 2020. 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, 2020, the Company had federal and state net operating loss carryforwards of $611.0 million and $704.8 million, respectively, which may be available to offset certain future income tax liabilities and begin to expire in 2021 and 2028, respectively. Of the federal net operating loss carryforwards of $611.0 million, approximately $214.8 million are from 2018, 2019 and 2020 and have no expiration date. As of December 31, 2020, the Company also had federal and state research and development tax credit carryforwards of $35.1 million and $12.4 million, respectively, which may be available to offset future income tax liabilities and begin to expire in 2021 and 2020, 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. 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. In 2019 the Australian Subsidiary was liquidated and $14.9 million of Foreign Net Operating Loss Carryovers related to the foreign subsidiary were written off. As of December 31, 2020 and 2019, the Company did not have any unrecognized tax benefits. Massachusetts, New Jersey, New York and Connecticut 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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