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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes |
15. | Income Taxes
Consolidated income (loss) before provision for income taxes consisted of the following (in thousands):
|  | Year Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
U.S. |  | $ | (114,484 | ) |  | $ | (107,450 | ) |  | $ | (91,121 | )
Non U.S. |  |  | 2,040 |  |  |  | 656 |  |  |  | 399 |
Total |  | $ | (112,444 | ) |  | $ | (106,794 | ) |  | $ | (90,722 | )
No income tax expense was recorded for the years ended December 31, 2016, 2015 and 2014 due to net operating loss carryforwards to offset the net income at Dynavax GmbH and a valuation allowance which offsets the deferred tax assets. The difference between the consolidated income tax benefit and the amount computed by applying the federal statutory income tax rate to the consolidated loss before income taxes was as follows (in thousands):
|  | Year Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Income tax benefit at federal statutory rate |  | $ | (38,183 | ) |  | $ | (36,301 | ) |  | $ | (30,818 | )
State tax |  |  | (334 | ) |  |  | (394 | ) |  |  | 1,204 |
Business credits |  |  | (1,950 | ) |  |  | (2,622 | ) |  |  | (1,484 | )
Deferred compensation charges |  |  | 3,016 |  |  |  | 1,481 |  |  |  | 2,710 |
Change in valuation allowance |  |  | 36,751 |  |  |  | 36,766 |  |  |  | 28,093 |
Other |  |  | 700 |  |  |  | 1,070 |  |  |  | 295 |
Total income tax expense |  | $ | - |  |  | $ | - |  |  | $ | - |
Deferred tax assets and liabilities consisted of the following (in thousands):
|  | December 31, |
|  | 2016 |  |  | 2015 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carry forwards |  | $ | 249,510 |  |  | $ | 212,074 |
Research tax credit carry forwards |  |  | 29,463 |  |  |  | 26,285 |
Accruals and reserves |  |  | 8,684 |  |  |  | 9,771 |
Capitalized research costs |  |  | 4,457 |  |  |  | 6,553 |
Deferred revenue |  |  | - |  |  |  | 908 |
Other |  |  | 1,303 |  |  |  | 1,375 |
Total deferred tax assets |  |  | 293,417 |  |  |  | 256,966 |
Less valuation allowance |  |  | (293,145 | ) |  |  | (256,712 | )
Net deferred tax assets |  |  | 272 |  |  |  | 254 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed Assets |  |  | (272 | ) |  |  | (254 | )
Total deferred tax liabilities |  |  | (272 | ) |  |  | (254 | )
Net deferred tax assets |  | $ | - |  |  | $ | - |
The tax benefit of net operating losses, temporary differences and credit carryforwards is required to be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on our ability to generate sufficient taxable income within the carryforward period. Because of our recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a full valuation allowance. The valuation allowance increased by $36.4 million, $36.2 million and $27.8 million during the years ended December 31, 2016, 2015 and 2014, respectively. We have not recorded deferred income taxes applicable to undistributed earnings of a foreign subsidiary that are indefinitely reinvested in foreign operations. Generally, such earnings become subject to U.S. tax upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of the deferred tax liability on such undistributed earnings. As of December 31, 2016, we had federal net operating loss carryforwards of approximately $695.9 million, which will expire in the years 2018 through 2036 and federal research and development tax credits of approximately $21.0 million, which expire in the years 2018 through 2036. As of December 31, 2016, we had net operating loss carryforwards for California and other states for income tax purposes of approximately $178.6 million, which expire in the years 2017 through 2036, and California state research and development tax credits of approximately $15.9 million, which do not expire. As of December 31, 2016, $1.3 million of net operating loss is attributable to stock-based compensation. As a result of the adoption of ASU 2016-09 we have recognized the net operating losses attributable to stock-based compensation and offset them with a full valuation allowance. As of December 31, 2016, we had net operating loss carryforwards for foreign income tax purposes of approximately $15.9 million, which do not expire. The Company asserts ability and intent to postpone remittance of all or part of net investment in Dynavax GmbH (including earnings) indefinitely (i.e., essentially permanently reinvest). As of December 31, 2016, we have cumulative total undistributed earnings for non-U.S. subsidiaries. Deferred income taxes have not been provided on the undistributed earnings of non-U.S. subsidiaries and any deferred tax liabilities, if recognized, are not expected to be significant. Uncertain Income Tax positions The total amount of unrecognized tax benefits as of December 31, 2016, 2015 and 2014 is $2.4 million. If recognized, none of the unrecognized tax benefits would affect the effective tax rate. We had no unrecognized tax benefits as of December 31, 2016. The following table summarizes the activity related to the Company’s unrecognized tax benefits:
Balance at December 31, 2015 |  | $ | (2,426 | )
Tax positions related to the current year |  |  |  |
Additions |  |  | - |
Reductions |  |  | - |
Tax positions related to the prior year |  |  |  |
Additions |  |  | - |
Reductions |  |  | - |
Balance at December 31, 2016 |  | $ | (2,426 | )
Our policy is to account for interest and penalties as income tax expense. As of December 31, 2016, the Company had no interest related to unrecognized tax benefits. No amounts of penalties related to unrecognized tax benefits were recognized in the provision for income taxes. We do not anticipate any significant change within 12 months of this reporting date of its uncertain tax positions. The Tax Reform Act of 1986 limits the annual use of net operating loss and tax credit carryforwards in certain situations where changes occur in stock ownership of a company. In the event the Company has a change in ownership, as defined, the annual utilization of such carryforwards could be limited. Due to past equity issuances and changes in ownership of Dynavax common stock, we believe that our ability to use our net operating losses and tax credits in the future may be limited. We are subject to income tax examinations for U.S. federal and state income taxes from 1998 forward. We are subject to tax examination in Germany from 2016 forward.

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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=65882285&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=65882285&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=65882285&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=65882285&loc=d3e32537-109319 + Details
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