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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The components of our provision for income taxes for the year ended December 31, 2021, 2020 and 2019, are as follows (in thousands):
Year Ended December 31,
202120202019
Current:
State$4 $2 $2 
Foreign— — 301 
Total current4 2 303 
Deferred:
Federal— — — 
Total deferred— — — 
Provision for income taxes$4 $2 $303 
The following is a reconciliation of the statutory federal income tax rate to our effective tax rate:
Year Ended December 31,
202120202019
Change in valuation allowance(20.0)%(22.3)%(21.9)%
Income tax at the federal statutory rate21.0 21.0 21.0 
Tax credits1.0 1.3 1.6 
State taxes, net of federal benefit0.4 0.7 0.3 
Stock based compensation(1.3)(0.1)(0.4)
Executive compensation disallowed under IRC Sec 162(m)(1.1)(0.5)(0.5)
Other— (0.1)(0.4)
Income tax provision— %— %(0.3)%
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets are as follows as of December 31, 2021 and 2020 (in thousands):
December 31,
20212020
Deferred tax assets:
Amortization and depreciation$61,098 $51,370 
Net operating loss carryforwards74,989 53,436 
Tax credits13,827 11,777 
Stock-based compensation4,054 5,524 
Other3,867 1,804 
Gross deferred tax assets157,835 123,911 
Valuation allowance(155,141)(123,402)
Deferred tax assets net of valuation allowance2,694 509 
Deferred tax liabilities:
Right-of-use asset(2,689)(479)
Other(5)(30)
Net deferred tax assets$— $— 
Realization of deferred tax assets is dependent on future taxable income, if any, the timing and the amount of which are uncertain. We assess the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant component of objective negative evidence evaluated was our cumulative loss incurred over the three-year period ended December 31, 2021. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of December 31, 2021, December 31, 2020 and December 31, 2019, a full valuation allowance has been recorded against our net deferred tax asset. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.
As of December 31, 2021, we had net operating loss carryforwards for federal income tax purposes of approximately $386.3 million, of which approximately $236.1 million can be carried forward indefinitely and the remaining net operating losses expire beginning in 2030, if not utilized. Federal research and development tax credit carryforwards of approximately $16.4 million that expire beginning in 2027, if not utilized, and foreign tax credit carryforwards of approximately $1.2 million that expire in 2027, if not utilized.
In addition, we had net operating loss carryforwards for California income tax purposes of approximately $88.3 million that expire beginning of 2030, if not utilized, and state research and development tax credit carryforwards of approximately $8.4 million which can be carried forward indefinitely. We had approximately $0.1 million of minimum tax credit carryovers for California income tax purposes. The minimum tax credits have no expiration date. We had other state net operating losses of approximately $4.5 million that begin to expire in 2035.
The future utilization of net operating loss and tax credit carryforwards and credits may be subject to an annual limitation, pursuant to Internal Revenue Code Sections 382 and 383, as a result of ownership changes that may have occurred previously or that could occur in the future. Due to the existence of the valuation allowance, limitations under Section 382 and 383 will not impact our effective tax rate.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted and signed into law in response to coronavirus disease 2019 (“COVID-19”). The CARES Act, among other things, included several significant provisions that impacted corporate taxpayers’ accounting for income taxes. Prior to the enactment of the CARES Act, the 2017 Tax Cuts and Jobs Act generally eliminated the ability to carryback net operating losses (“NOLs”), and permitted the NOLs arising in tax years beginning after December 31, 2018 to be carried forward indefinitely, limited to 80% of the taxpayer’s income. The CARES Act amended the NOL rules, suspending the 80% limitation on the utilization of NOLs generated after December 31, 2018 and before January 1, 2021. Additionally, the CARES Act allows corporate NOLs arising in taxable years beginning after December 31, 2018 and before January 1, 2021, to be carried back to each of the five taxable years preceding
the taxable year of the loss. Also, the CARES Act allows companies to defer making certain payroll tax payments until future years. With the enactment of the CARES Act, the company does not expect a financial statement impact from income taxes.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
December 31,
202120202019
Balance at beginning of year$23,624 $24,538 $23,052 
Additions (subtractions) based on tax positions related to prior year(811)(1,388)755 
Additions based on tax positions related to current year1,613 474 731 
Balance at end of year$24,426 $23,624 $24,538 
We recognize a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more likely than not recognition at the effective date to be recognized. None of our unrecognized tax benefits would impact the effective tax rate if recognized, because the benefit would be offset by an increase in the valuation allowance.
We have elected to include interest and penalties as a component of tax expense. During the years ended December 31, 2021, 2020 and 2019, we did not recognize accrued interest and penalties related to unrecognized tax benefits. Although the timing and outcome of an income tax audit is highly uncertain, we do not anticipate that the amount of existing unrecognized tax benefits will significantly change during the next 12 months.
We file income tax returns in the U.S. federal, Alabama, Arizona, California, Colorado, Connecticut, DC, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Maryland, Michigan, Missouri, Kansas City (MO), Mississippi, New York & New York MTA, New York City, Nebraska, New Jersey, New Mexico, North Carolina, Cincinnati (OH), Maineville (OH), Oklahoma, Pennsylvania, Tennessee, Texas, Virginia and Wisconsin tax jurisdictions. Due to our net operating loss and tax credit carryforwards, the income tax returns remain open to U.S. federal and state tax examinations. The Company is not currently under examination in any tax jurisdiction.