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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company’s loss before income tax expense by jurisdiction is as follows (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Domestic | $ | (628,984) |  |  | $ | (712,183) |  |  | $ | (1,633,016) |
Foreign | 85,953 |  |  | 58,536 |  |  | (81,520) |
Loss before income tax expense | $ | (543,031) |  |  | $ | (653,647) |  |  | $ | (1,714,536) |
Significant components of the current and deferred income tax expense (benefit) are as follows (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |
Domestic | $ | (1,300) |  |  | $ | 1,300 |  |  | $ | — |
State and local | (157) |  |  | 503 |  |  | — |
Foreign | 1,445 |  |  | 2,489 |  |  | 29,215 |
Total current income tax expense (benefit) | (12) |  |  | 4,292 |  |  | 29,215 |
Deferred: |  |  |  |  |
Foreign | 2,043 |  |  | — |  |  | — |
Total income tax expense | $ | 2,031 |  |  | $ | 4,292 |  |  | $ | 29,215 |
A reconciliation of income tax expense to the amount computed by applying the U.S. federal statutory tax rate to the Company’s effective tax rate is as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Statutory federal tax rate | 21 | % |  | 21 | % |  | 21 | %
State income taxes, net of federal benefit | 1 | % |  | 2 | % |  | 6 | %
Research and development and other tax credits | — | % |  | 1 | % |  | 1 | %
Non-deductible expenses | — | % |  | (1) | % |  | (2) | %
Non-cash stock-based compensation | (1) | % |  | (1) | % |  | 4 | %
U.S. taxation of foreign operations | (4) | % |  | (3) | % |  | — | %
Cancellation of Indebtedness | (1) | % |  | — | % |  | (1) | %
Non-US tax credits | 4 | % |  | — | % |  | — | %
Other | — | % |  | 2 | % |  | (1) | %
Change in tax rate | — | % |  | (20) | % |  | — | %
Change in valuation allowance | (20) | % |  | (2) | % |  | (30) | %
Income tax expense | — | % |  | (1) | % |  | (2) | %
As of December 31, 2023, the Company has available federal and state net operating losses of $2.4 billion, $877.6 million, respectively, that may be applied against future taxable income in the respective jurisdiction. The federal net operating losses of $2.4 billion can be carried forward indefinitely, with all but $11.3 million, which expires in 2037, limited to 80% of annual taxable income. State net operating losses of $457.4 million have various expiration dates between 2028 and 2042. The remaining state net operating losses of $420.2 million can be carried forward indefinitely. The Company also has research tax credits of $51.9 million that will begin to expire in 2024 through 2043 and a foreign tax credit carryforward of $18.7 million that will expire in 2030. Utilization of the federal and state net operating loss carryforwards and research tax credits may be subject to an annual limitation due to potential ownership changes of the Company. As of December 31, 2023, the Company does not expect such limitation, if any, to impact the use of its net operating losses and research tax credits. The Company files income tax returns in the U.S. federal jurisdiction and in various states, as well as in multiple foreign jurisdictions including Sweden and the Czech Republic. The Company has U.S. federal and state net operating losses and credit carryforwards that are subject to examination from 2003 through 2023. The returns in Sweden are subject to examination from 2016 through 2023 and the returns for the Czech Republic are subject to examination from 2019 through 2023. The significant components of the Company’s deferred tax assets and liabilities as of December 31 were as follows (in thousands):
| December 31,
| 2023 |  | 2022
Deferred tax assets: |  |  |
Federal and state net operating loss carryforward | $ | 550,272 |  |  | $ | 479,134 |
Foreign net operating loss carryforward | — |  |  | 5,752 |
Research tax credits | 51,878 |  |  | 45,560 |
Lease liability | 25,207 |  |  | 27,625 |
Deferred revenue | 266,392 |  |  | 195,049 |
Inventory reserve | 79,386 |  |  | 213,076 |
Allowance for sales returns | 20,756 |  |  | — |
Non-cash stock-based compensation | 30,727 |  |  | 27,599 |
Capitalized research costs | 132,500 |  |  | 49,309 |
Foreign tax credit carryforward | 18,679 |  |  | — |
Other | 10,996 |  |  | 13,695 |
Gross deferred tax assets | 1,186,793 |  |  | 1,056,799 |
Valuation allowance | (1,128,941) |  |  | (1,020,123) |
Total deferred tax assets | $ | 57,852 |  |  | $ | 36,676 |
Deferred tax liabilities: |  |  |
ROU assets | (41,456) |  |  | (23,330) |
Fixed assets | (17,160) |  |  | (11,587) |
Intangibles | (1,279) |  |  | (1,055) |
Other | — |  |  | (704) |
Total deferred tax liabilities | $ | (59,895) |  |  | $ | (36,676) |
Net deferred tax assets (liabilities) | $ | (2,043) |  |  | $ | — |
The Company has evaluated the positive and negative evidence bearing upon the realization of its deferred tax assets, including its history of significant losses in every year since inception and, in accordance with U.S GAAP, has fully reserved the net deferred tax asset. The Company concluded that realization of its net deferred tax assets is not more-likely-than-not to be realized as of December 31, 2023 and 2022. The valuation allowance increased by $108.8 million and $4.8 million for the years ended December 31, 2023 and 2022, respectively. The net deferred tax liability of $2.0 million at December 31, 2023 is included within other non-current liabilities on the accompanying consolidated balance sheet. The Company recognizes the effect of an income tax position when it is more likely than not, based on the technical merits, that the income tax position will be sustained upon examination. A reconciliation of the beginning and ending amounts of unrecognized tax benefits in the year ended December 31, 2023, 2022, and 2021 is as follows (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Unrecognized tax benefits balance at January 1 | $ | 5,194 |  |  | $ | 11,154 |  |  | $ | 8,766 |
Additions for tax positions of current year | 271 |  |  | 1,260 |  |  | 4,158 |
Additions for tax positions of prior years | — |  |  | 807 |  |  | — |
Reductions for tax positions of prior year | (1,228) |  |  | (8,027) |  |  | (1,770) |
Settlements of tax positions of prior years | — |  |  | — |  |  | — |
Unrecognized tax benefits balance at December 31, | $ | 4,237 |  |  | $ | 5,194 |  |  | $ | 11,154 |
The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2023 and 2022, the Company had no accruals for interest or penalties. The total amount of unrecognized tax benefits that, if recognized, could affect the effective tax rate was $4.2 million and $5.2 million as of December 31, 2023 and 2022, respectively. However, the Company maintains a full valuation allowance as of December 31, 2023 and 2022 and the recognition of any unrecognized tax benefits would be offset with a change in the valuation allowance and therefore there would be no income statement impact. As of December 31, 2023, the Company does not expect a significant change in the recorded unrecognized tax benefits liability balance during the next twelve months. The unrecognized tax benefits are presented in the financial statements as a reduction to the deferred tax assets for all periods. In 2021 the Organization for Economic Cooperation and Development (“OECD”) developed guidance on Base Erosion and Profit Shifting (“BEPS”) Pillar Two Model Rules (“Pillar Two”), which addresses corporate tax planning strategies used by some large multinational corporations to shift profits from higher-tax jurisdictions to lower-tax jurisdictions or zero-tax locations. This guidance imposes a 15% minimum tax on the earnings of large multinational corporations. Pillar Two is expected to be effective in 2024 for the jurisdictions in which the Company operates. The Company is currently evaluating the application of Pillar Two and does not expect these rules to have a significant impact on its effective tax rate or its consolidated financial statements.

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