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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of loss before income tax provision consist of the following:
| Year Ended December 31,
(in thousands) | 2023 |  | 2022 |  | 2021
U.S. | $ | (163,580) |  |  | $ | (128,650) |  |  | $ | (57,741) |
Foreign | (43) |  |  | (50) |  |  | (55) |
Consolidated net loss before income taxes | $ | (163,623) |  |  | $ | (128,700) |  |  | $ | (57,796) |
For the years ended December 31, 2023 and 2022, we recognized an income tax benefit of $4,000 and income tax provision of $24,000, respectively, related to state income taxes. For the year ended December 31, 2021, we recognized no benefit or provision for income taxes. Significant components of our deferred tax assets and liabilities are as follows:
| December 31,
(in thousands) | 2023 |  | 2022
Deferred Tax Assets: |  |  |
Net operating loss carryforwards | $ | 72,777 |  |  | $ | 66,160 |
Section 174 Capitalized R&D | 37,240 |  |  | 16,570 |
Research and development credits | 19,058 |  |  | 12,844 |
Equity compensation | 10,533 |  |  | 10,021 |
Deferred Zejula royalty revenue | 6,978 |  |  | 7,371 |
Lease liability | 3,912 |  |  | 4,194 |
Other, net | 7,201 |  |  | 3,458 |
Total deferred tax assets | 157,699 |  |  | 120,618 |
Deferred Tax Liabilities: |  |  |
ROU asset | (3,552) |  |  | (3,859) |
Other, net | (2,658) |  |  | — |
Fixed assets | (122) |  |  | (189) |
Total deferred tax liabilities | (6,332) |  |  | (4,048) |
Net deferred tax assets | 151,367 |  |  | 116,570 |
Less: valuation allowance | (151,367) |  |  | (116,570) |
Deferred tax assets, net of valuation allowance | $ | — |  |  | $ | — |
We have recorded a full valuation allowance against our net deferred tax assets due to the uncertainty surrounding the realization of such assets. Management has determined it more likely than not that the deferred tax assets are not realizable due to our historical loss position. As of December 31, 2023, we had federal and state net operating loss carryforwards (“NOLs”), of $313.8 million and $73.3 million, respectively. The federal and state NOLs generated prior to 2018 will begin to expire in 2030 and 2028, respectively, unless previously utilized. The federal NOL includes $261.7 million of net operating losses generated in 2018 and after. Federal net operating losses generated in 2018 and after carryover indefinitely and may generally be used to offset up to 80% of future taxable income. As of December 31, 2023, we had federal and state research tax credit carryforwards of approximately $12.1 million and $14.4 million, respectively. The federal research tax credit carryforwards will begin to expire in 2041 and the state research tax credits carryforward indefinitely. We also have foreign tax losses of $3.2 million, which will carry forward indefinitely, subject to a continuity of ownership test. The above NOL carryforward and the federal and state research tax credit carryforwards may be subject to an annual limitation under section 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions if we experience one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. In September 2015, we completed a Section 382 analysis through December 31, 2014 and determined that there was an ownership change in 2007 that may limit the utilization of approximately $5.3 million and $5.4 million in federal and state NOLs, respectively, and $0.2 million in both federal and state research tax credits. We subsequently extended the analysis period of the study through December 31, 2022, noting ownership changes on January 31, 2017 and March 8, 2021. To reflect the impact of the January 31, 2017 and March 8, 2021 ownership changes, we reduced federal research credit carryforwards by approximately $15.0 million. Our use of federal and state NOLs and research credits could be limited further by the provisions of Section 382 of the U.S. Internal Revenue Code of 1986, as amended, depending upon the timing and amount of additional equity securities that we have issued or will issue. State NOL carryforwards may be similarly limited. If a change in ownership were to have occurred, NOL and tax credits carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by ownership changes, if any, will not impact our effective tax rate. The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax provision:
| Year Ended December 31,
(in thousands) | 2023 |  | 2022 |  | 2021
Expected income tax benefit at federal statutory tax rate | $ | (34,361) |  |  | $ | (27,026) |  |  | $ | (12,138) |
State income taxes, net of federal benefit | (1,912) |  |  | (800) |  |  | (142) |
Permanent items | 56 |  |  | 27 |  |  | 17 |
Equity compensation | 2,840 |  |  | (297) |  |  | (708) |
Non-deductible compensation | 3,693 |  |  | 2,060 |  |  | — |
Research credits | (6,213) |  |  | (3,319) |  |  | 8,087 |
Other | 109 |  |  | (6) |  |  | 42 |
Change in the valuation allowance | 35,784 |  |  | 29,385 |  |  | 4,842 |
Income tax (benefit) expense | $ | (4) |  |  | $ | 24 |  |  | $ | — |
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. As of December 31, 2023 and 2022, we had no unrecognized tax benefits that, if recognized and realized, would affect the effective tax rate due to the valuation allowance against deferred tax assets. The following table summarizes the activity related to our unrecognized tax benefits:
| Year Ended December 31,
(in thousands) | 2023 |  | 2022
Balance at the beginning of the year | $ | 3,369 |  |  | $ | 2,473 |
Increase related to prior year tax positions | 153 |  |  | — |
Increase related to current year tax positions | 1,494 |  |  | 896 |
Balance at the end of the year | $ | 5,016 |  |  | $ | 3,369 |
If recognized, these amounts would not affect our effective tax rate, since they would be offset by an equal corresponding adjustment in the deferred tax asset valuation allowance. We do not anticipate there will be a significant change in unrecognized tax benefits within the next 12 months. Our policy is to recognize interest and penalties related to income tax matters in the provision for income taxes. As of December 31, 2023 and 2022, there were no interest or penalties on uncertain tax benefits. We file income tax returns in the United States, California, various U.S. state jurisdictions and Australia. Due to our losses incurred, we are essentially subject to income tax examination by tax authorities from inception to date.

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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 -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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