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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Taxes [Abstract] |
Income Taxes | NOTE 9. INCOME TAXES We are subject to income taxes in the United States and certain states in which we operate, and we use estimates in determining our provisions for income taxes. Significant management judgement is required in determining our provision for income taxes, deferred tax assets and liabilities, and valuation allowances recorded against net deferred tax assets in accordance with U.S. GAAP. These estimates and judgements occur in the calculation of tax credits, benefits, and deductions, and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes, as well as the interest and penalties related to uncertain tax positions. Significant changes to these estimates may result in an increase or decrease to our tax provision in the current or subsequent period. We assess all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and we will determine whether the factors underlying the sustainability assertion have changed and the amount of the recognized tax benefit is still appropriate. We account for Global Intangible Low-taxed Income as a period cost. During the years ended December 31, 2022, 2021, and 2020 (loss) income before taxes from U.S. operations were ($315.7) million, ($275.4) million, and $28.9 million, respectively, and income before taxes from foreign operations was $1.8 million, $0.8 million, and $0.6 million, respectively. Income tax provision (benefit) related to continuing operations differ from the amounts computed by applying the statutory income tax rate of 21% to pretax income or loss as follows:
|  | Years ended December 31,
|  | 2022 |  |  | 2021 |  |  | 2020 |
Statutory tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State tax rate, net of federal benefit |  | 4.4 |  |  | 5.5 |  |  | (8.3) |
Change in valuation allowance |  | (25.1) |  |  | (4.9) |  |  | 6.3 |
Tax credits |  | 2.2 |  |  | 2.5 |  |  | (3.6) |
Share-based compensation |  | (2.2) |  |  | 10.9 |  |  | (15.2) |
Merger Expenses |  | - |  |  | (0.9) |  |  | - |
Other |  | (0.4) |  |  | (0.1) |  |  | (0.2) |
Total |  | (0.1) | % |  | 34.0 | % |  | 0.0 | %
Deferred income taxes reflect the net tax effects of loss and credit carry forwards 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 our deferred tax assets for federal and state income taxes are as follows (in thousands):
|  | December 31,
|  | 2022 |  | 2021
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 400,629 |  | $ | 378,035
Research and development credits |  |  | 71,526 |  |  | 60,672
Capitalized research and experimental expenses |  |  | 34,863 |  |  | —
Accruals and reserves |  |  | 18,417 |  |  | 10,822
Share-based compensation |  |  | 17,117 |  |  | 12,838
Operating lease liability |  |  | 11,537 |  |  | 13,105
Total deferred tax assets |  |  | 554,089 |  |  | 475,472
Less: Valuation allowance |  |  | (445,574) |  |  | (366,940)
Total deferred tax assets: |  |  | 108,515 |  |  | 108,532
Intangibles |  |  | (98,931) |  |  | (97,345)
Fixed assets |  |  | (1,262) |  |  | (1,523)
Operating lease right-of-use assets |  |  | (9,157) |  |  | (10,502)
Total deferred tax liabilities |  |  | (109,350) |  |  | (109,370)
Net deferred tax assets |  | $ | (835) |  | $ | (838)
At December 31, 2022, we maintained a full valuation allowance against all of our deferred tax assets that totaled $445.6 million, including net operating loss carryforwards and research and development credits of $400.6 million and $71.5 million, respectively. A valuation allowance is recorded when it is more likely than not that all or some portion of the deferred income tax assets will not be realized. We regularly assess the need for a valuation allowance against our deferred income tax assets by considering both positive and negative evidence related to whether it is more likely than not that our deferred income tax assets will be realized. In evaluating our ability to recover our deferred income tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. We maintain a valuation allowance on the net deferred tax assets of our U.S. entities as we have concluded that it is more likely than not that we will not realize our deferred tax assets. Accordingly, this benefit from income taxes is reflected on our Consolidated Statements of Operations and Comprehensive (Loss) Income for the year ended December 31, 2022. For the year ended December 31, 2022, our valuation allowance increased to $445.6 million, primarily because of an increase in our net operating losses, credits, and capitalized research and experimental expenses that were fully offset by a valuation allowance. For the year ended December 31, 2021, our valuation allowance increased to $366.9 million, primarily because of an increase in our net operating losses, credits, and acquisition of deferred tax assets that were fully offset by a valuation allowance. As of December 31, 2022, we had a net operating loss carryforward for federal income tax purposes of approximately $1,573.8 million, of which $774.9 million will begin to expire in 2024 if not utilized. We had a total state net operating loss carryforward of approximately $1,071.8 million, which are subject to annual expirations. Utilization of some of the federal and state net operating loss and credit carryforwards are subject to annual limitations due to the “change of ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of net operating losses and credits before utilization. We have federal credits of approximately $47.2 million, which will begin to expire in 2024 if not utilized and state research credits of approximately $42.6 million, which have no expiration date. These tax credits are subject to the same limitations discussed above. As of December 31, 2022, our total unrecognized tax benefit was $10.4 million. A reconciliation of the beginning and ending unrecognized tax benefit balance is as follows (in thousands):
Balance as of December 31, 2019 |  | $ | 21,979
Decrease in balance related to tax positions taken in prior year |  |  | (17,255)
Increase in balance related to tax positions taken during current year |  |  | 1,230
Balance as of December 31, 2020 |  |  | 5,954
Increase in balance related to tax positions taken in prior year |  |  | 189
Increase in balance related to tax positions taken during current year |  |  | 2,192
Balance as of December 31, 2021 |  |  | 8,335
Decrease in balance related to tax positions taken in prior year |  |  | (10)
Increase in balance related to tax positions taken during current year |  |  | 2,085
Balance as of December 31, 2022 |  | $ | 10,410
Our practice is to recognize interest and penalties related to income tax matters in income tax expense. As of both December 31, 2022 and 2021, we had no accrued interest or penalties due to our net operating losses available to offset any tax adjustment. If total unrecognized tax benefits were realized in the future, it would not result in any tax benefit as we currently have a full valuation allowance. We file U.S. federal and various state income tax returns. For U.S. federal and state income tax purposes, the statute of limitations currently remains open for the years ending December 31, 2019 to present and December 31, 2018 to present, respectively. In addition, all of the net operating losses and research and development credit carryforwards that may be utilized in future years may be subject to examination. We are not currently under examination by income tax authorities in any jurisdiction.

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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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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