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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The total provision for income taxes consisted of the following:
| Year Ended December 31, |  |  |  |
| 2021 |  | 2020 |  | 2019 |  |  |  |
| (in thousands) |  |  |  |
Current: |  |  |  |  |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |  |  |  |  |
State | 425 |  |  | 26 |  |  | 13 |  |  |  |  |
Total current | 425 |  |  | 26 |  |  | 13 |  |  |  |  |
Deferred: |  |  |  |  |  |  |  |  |
Federal | (34,462) |  |  | — |  |  | — |  |  |  |  |
State | (4,849) |  |  | — |  |  | — |  |  |  |  |
Total deferred | (39,311) |  |  | — |  |  | — |  |  |  |  |
Total provision for income taxes | $ | (38,886) |  |  | $ | 26 |  |  | $ | 13 |  |  |  |  |
The following summarizes the differences between the income tax provision recorded by the Company and the amount computed by applying the statutory federal income tax rate of 21% to loss before income tax for the years ended December 31, 2021, 2020 and 2019:
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
| (in thousands)
Tax benefit at federal statutory rate | $ | (43,747) |  |  | $ | (15,664) |  |  | $ | (17,102) |
State taxes, net of federal benefit | (4,431) |  |  | 21 |  |  | 10 |
Research and other credits | (2,305) |  |  | (1,245) |  |  | (1,643) |
VA release related to Title365 PPA | (34,462) |  |  | — |  |  | — |
Change in valuation allowance | 38,188 |  |  | 16,431 |  |  | 16,388 |
Section 162(m) adjustment | 10,241 |  |  | — |  |  | — |
Non-deductible transaction costs | 1,252 |  |  | — |  |  | — |
Stock-based compensation | (2,828) |  |  | 572 |  |  | 1,739 |
Other | (794) |  |  | (89) |  |  | 621 |
Total provision for income taxes | $ | (38,886) |  |  | $ | 26 |  |  | $ | 13 |
Deferred income taxes reflect the net tax effects of loss and credit carryforwards and 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 the Company’s deferred tax assets and liabilities are as follows:
| December 31, 2021 |  | December 31, 2020
| (in thousands)
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 102,240 |  |  | $ | 65,334 |
Lease liabilities | 4,721 |  |  | 4,287 |
Research and other credits | 12,627 |  |  | 9,914 |
Accruals and reserves | 1,098 |  |  | 1,501 |
Interest expense limitation | 2,174 |  |  | — |
Stock-based compensation | 1,980 |  |  | 551 |
Fixed assets | 1,014 |  |  | — |
Other deferred tax assets | 357 |  |  | — |
Gross deferred tax assets | 126,211 |  |  | 81,587 |
Less: valuation allowance | (77,843) |  |  | (73,936) |
Total deferred tax assets | $ | 48,368 |  |  | $ | 7,651 |
Deferred tax liabilities: |  |  |
Right-of-use assets | $ | (3,776) |  |  | $ | (3,282) |
Deferred contract costs | (2,194) |  |  | (2,608) |
Fixed assets | — |  |  | (55) |
ASC 606 adjustments | (667) |  |  | (1,706) |
Other deferred tax liabilities | (462) |  |  | — |
Amortization | (752) |  |  | — |
Acquired intangible assets | (43,381) |  |  | — |
Gross deferred tax liabilities | (51,232) |  |  | (7,651) |
Total net deferred liabilities | $ | (2,864) |  |  | $ | — |
Included in the Company’s deferred tax assets and liabilities are the deferred tax effects associated with the fair value of the assets acquired and liabilities assumed from the acquisition of Title365 and acquired tax attributes that carry over to post-acquisition tax periods, including U.S. and state net operating losses and tax credits. The Company believes that, based on available evidence, both positive and negative, it is more likely than not that the net deferred tax assets will not be utilized. In conjunction with its acquisition of Title365, the Company released $39.3 million valuation allowance during the year ended December 31, 2021, attributed to ASC 805-740-30-3, which upon acquisition allowed the Company to recognize certain deferred tax assets of approximately $39.3 million which had previously been offset by a valuation allowance. At December 31, 2021, the Company had a valuation allowance of $(77.8) million. The valuation allowance increase of $3.9 million during 2021 is primarily attributable to an increase in deferred tax assets resulting from net operating losses in 2021 partially offset by the acquisition of Title 365's deferred tax liabilities. At December 31, 2021, the Company had net operating loss (“NOL”) carryforwards for federal and state income tax purposes of approximately $406.5 million and $278.1 million, respectively, available to reduce future taxable income. The federal net operating losses generated before 2018 will begin to expire in 2033. The federal net operating losses generated in and after 2018 may be carried forward indefinitely. The state NOL carryforwards vary by state and begin to expire in 2024. At December 31, 2021, the Company had $10.9 million of federal research credit carryforwards which will begin to expire in 2033 and state research credit carryforwards of $9.2 million which have no expiration date. Utilization of the net operating loss and tax credit carryforwards may be subject to annual limitations due to the ownership change limitation provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. Events which may cause limitations in the amount of the NOLs that the Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Any annual limitations may result in the expiration of NOL and credits before they are able to be utilized. As of December 31, 2021, the Company had $5.9 million of unrecognized tax benefits, none of which, if recognized, would impact the effective tax rate. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes. Interest and penalties were not significant during the years ended December 31, 2021, 2020 and 2019. The Company does not expect any material changes to its unrecognized tax benefits within the next twelve months. The following table reflects the changes in the Company’s unrecognized tax benefits:
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
| (in thousands)
Beginning Balance | $ | 4,155 |  |  | $ | 3,167 |  |  | $ | 1,146 |
Gross increases—tax positions in prior periods | — |  |  | — |  |  | 703 |
Gross increases—tax positions in current periods | 1,793 |  |  | 1,188 |  |  | 1,318 |
Gross decreases—tax positions in prior periods | — |  |  | (200) |  |  | — |
Ending balance | $ | 5,948 |  |  | $ | 4,155 |  |  | $ | 3,167 |
The Company files income tax returns in the U.S. Federal jurisdiction and various state jurisdictions and has identified its Federal, California, Minnesota, and Texas tax returns as significant tax filings. The Company is not currently under examination by income tax authorities in federal or state jurisdictions. However, because the Company has net operating losses and credits carried forward in several jurisdictions, including the Federal, California, and Minnesota jurisdictions, certain items attributable to closed tax years are still subject to adjustment by applicable taxing authorities through an adjustment to tax attributes carried forward to open years. All tax returns will remain open for examination by the federal and most state taxing authorities for three years and four years, respectively, from the date of utilization of any net operating loss carryforwards or research and development credits.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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