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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes |
(13) | Income Taxes
There is no income tax provision for the years ended December 31, 2015, 2014 and 2013. Income before income taxes consists of:
|  | Year Ended December 31, |
(in thousands) |  | 2015 |  |  | 2014 |  |  | 2013 |
Domestic |  | $ | (11,276 | ) |  | $ | (12,950 | ) |  | $ | (19,142 | )
Foreign |  |  | (3,428 | ) |  |  | (4,431 | ) |  |  | (11,182 | )
Income before taxes |  | $ | (14,704 | ) |  | $ | (17,381 | ) |  | $ | (30,324 | )
The provision for income taxes differs from the amount computed by applying the statutory rate as follows:
|  | Year Ended December 31, |
(in thousands) |  | 2015 |  |  | 2014 |  |  | 2013 |
Income taxes using U.S federal statutory rate |  | $ | (4,999 | ) |  | $ | (5,926 | ) |  | $ | (10,309 | )
Amortization of gain on IP migration |  |  | 767 |  |  |  | 767 |  |  |  | 781 |
State income taxes, net of federal benefit |  |  | 380 |  |  |  | 2,215 |  |  |  | (1,390 | )
Foreign rate differential |  |  | 920 |  |  |  | 1,069 |  |  |  | 2,761 |
Valuation allowance |  |  | 2,649 |  |  |  | 886 |  |  |  | 7,683 |
Derivative charge |  |  | (192 | ) |  |  | (660 | ) |  |  | (937 | )
Stock option exercises and cancellations |  |  | 674 |  |  |  | 1,748 |  |  |  | 1,589 |
Research and development costs |  |  | (199 | ) |  |  | (125 | ) |  |  | (1,090 | )
Other |  |  | — |  |  |  | 26 |  |  |  | 912 |
|  | $ | — |  |  | $ | — |  |  | $ | — |
Significant components of the Company’s deferred tax assets are as follows:
(in thousands) |  | December 31, 2015 |  |  | December 31, 2014 |
Deferred tax assets: |  |  |  |  |  |  |  |
Employee compensation accruals |  | $ | 1,279 |  |  | $ | 1,866 |
Accrued liabilities |  |  | 633 |  |  |  | 1,356 |
Research tax credits |  |  | 3,796 |  |  |  | 3,597 |
Other |  |  | 66 |  |  |  | 45 |
Net operating losses |  |  | 77,906 |  |  |  | 74,359 |
Total deferred tax assets |  |  | 83,680 |  |  |  | 81,223 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Total deferred tax liabilities |  |  | — |  |  |  | — |
Valuation allowance |  |  | 83,680 |  |  |  | 81,223 |
Net deferred tax assets |  | $ | — |  |  | $ | — |
As of December 31, 2015 and December 31, 2014, the Company had net operating loss carryforwards for U.S. federal income tax purposes of approximately $184.5 million and $171.6 million, respectively. A portion of the federal amount, $8.6 million, is subject to an annual limitation of approximately $123,000 as a result of a change in the Company’s ownership through May 2003, as defined by Federal Internal Revenue Code Section 382 and the related income tax regulations. As a result of the limitation, approximately $175.9 million is available to offset future federal taxable income which will expire between 2018 and 2035. In addition, the Company’s state net operating losses are also subject to annual limitations that generally follow the federal Section 382 provisions, adjusted for each state’s respective income apportionment percentages. As of December 31, 2015 and December 31, 2014, the Company had net operating loss carryforwards for state and city income tax purposes between approximately $27.3 million and $109.7 million and between approximately $276.3 million and $110.5 million, respectively, which expire through 2035. As of December 31, 2015 and December 31, 2014, the Company had a net operating loss carryforward for foreign income tax purposes of $22.1 million and $21.8 million, respectively, which have indefinite carryforward periods. As of December 31, 2015 and December 31, 2014, the Company had federal research and development tax credit carryforwards of approximately $3.8 million and $3.6 million, respectively, which expire through 2035. The Company has a tax benefit of approximately $1.0 million related to the exercise of non-qualified stock options. Pursuant to ASC 718, the benefit will be recognized and recorded to additional paid-in capital when the benefit is realized through the reduction of taxes payable. Management has established a 100% valuation allowance against the deferred tax assets as management does not believe it is more likely than not that these assets will be realized. The Company’s valuation allowance increased by approximately $2.6 million, $0.9 million, and $7.7 million in 2015, 2014, and 2013, respectively. The Company complies with the provisions of ASC 740-10 in accounting for its uncertain tax positions. ASC 740-10 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely that not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company has determined that the Company has no significant uncertain tax positions requiring recognition under ASC 740-10. The Company is subject to income tax in the U.S., as well as various state and international jurisdictions. The Company is currently under examination by the Internal Revenue Service for the period ending December 31, 2013. The examination commenced in the third quarter of 2015 and as of December 31, 2015, there have been no adjustments proposed. The Company's total amount of unrecognized tax benefits could increase within the next twelve months as a result of the exam. However, the effect of the outcome cannot be reasonably estimated as the exam is presently in its initial stages and the IRS is in the process of issuing information document requests (IDR's) to obtain information and documents substantiating positions reflected on the tax return under examination. The Company has not been audited by any state tax authorities in connection with income taxes. The Company has not been audited by international tax authorities or any states in connection with income taxes. The Company’s New York State tax returns have been subject to annual desk reviews which have resulted in insignificant adjustments to the related franchise tax liabilities and credits. The Company’s tax years generally remain open to examination for all federal, state and foreign tax matters until its net operating loss carryforwards are utilized and the applicable statutes of limitation have expired. The federal and state tax authorities can generally reduce a net operating loss (but not create taxable income) for a period outside the statute of limitations in order to determine the correct amount of net operating loss which may be allowed as a deduction against income for a period within the statute of limitations. Delcath recognizes interest accrued related to unrecognized tax benefits and penalties, if incurred, as a component of income tax expense.

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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=6907707&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=6907707&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=6907707&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=6907707&loc=d3e32537-109319 + Details
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