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INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES We are subject to income taxes both in the United States and certain foreign jurisdictions 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, 2023, 2022, and 2021 income/(loss) before taxes from U.S. operations were ($318.9) million, ($315.7) million, and ($275.4) million, respectively, and income/(loss) before taxes from foreign operations was $0.7 million, $1.8 million, and $0.8 million, respectively. Provision (Benefit) for Income Taxes The provision (benefit) for income taxes consists of the following (in thousands):
| Years ended December 31,
| 2023 |  | 2022 |  | 2021
Total Current | $ | — |  |  | $ | — |  |  | $ | — |
Deferred: |  |  |  |  |
Federal | (9,956) |  |  | — |  |  | (83,742) |
State | (1,468) |  |  | — |  |  | (9,907) |
Foreign | — |  |  | — |  |  | — |
Total Deferred | (11,424) |  |  | — |  |  | (93,649) |
(Benefit) Provision for Income Taxes | $ | (11,424) |  |  | $ | — |  |  | $ | (93,649) |
Income tax provision (benefit) related to continuing operations differ from the amounts computed by applying the statutory income tax rate of 21% to pretax loss as follows:
| Years ended December 31,
| 2023 |  | 2022 |  | 2021
Statutory tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State tax rate, net of federal benefit | 3.0 |  |  | 4.4 |  |  | 5.5 |
Change in valuation allowance | (20.0) |  |  | (25.1) |  |  | (4.9) |
Tax credits | 2.0 |  |  | 2.2 |  |  | 2.5 |
Share-based compensation | (2.1) |  |  | (2.2) |  |  | 10.9 |
Merger Expenses | (0.1) |  |  | — |  |  | (0.9) |
Other | (0.2) |  |  | (0.4) |  |  | (0.1) |
Total | 3.6 | % |  | (0.1) | % |  | 34.0 | %
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 our deferred tax assets for federal and state income taxes are as follows (in thousands):
| December 31,
| 2023 |  | 2022
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 435,488 |  |  | $ | 400,629 |
Research and development credits | 83,922 |  |  | 71,526 |
Capitalized research and experimental expenses | 63,196 |  |  | 34,863 |
Accruals and reserves | 16,872 |  |  | 13,830 |
Cancellation of indebtedness income and interest expense | 14,907 |  |  | 4,587 |
Share-based compensation | 18,584 |  |  | 17,117 |
Operating lease liability | 9,510 |  |  | 11,537 |
Total deferred tax assets | 642,479 |  |  | 554,089 |
Less: Valuation allowance | (525,703) |  |  | (445,574) |
Total deferred tax assets: | 116,776 |  |  | 108,515 |
Intangibles | (109,488) |  |  | (98,931) |
Fixed assets | (548) |  |  | (1,262) |
Operating lease right-of-use assets | (7,491) |  |  | (9,157) |
Total deferred tax liabilities | (117,527) |  |  | (109,350) |
Deferred tax liabilities, net | $ | (751) |  |  | $ | (835) |
At December 31, 2023, we maintained a valuation allowance against our net deferred tax assets which totaled $525.7 million, including net operating loss carryforwards and research and development credits of $435.5 million and $83.9 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. A deferred income tax benefit of $11.4 million for the year ended December 31, 2023, is related to the release of the valuation allowance for deferred tax assets due to the recognition of deferred tax liabilities in connection with the Apton acquisition. 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 for the year ended December 31, 2023. For the year ended December 31, 2023, the Company's valuation allowance increased to $525.7 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, 2022, the Company's 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. As of December 31, 2023, we had a net operating loss carryforward for federal income tax purposes of approximately $1,709.3 million, of which $788.1 million is subject to expiration beginning in 2024. We had a total state net operating loss carryforward of approximately $1,171.8 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 in 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 $57.7 million, which will begin to expire in 2024 if not utilized and state research credits of approximately $49.8 million, which have no expiration date. These tax credits are subject to the same limitations discussed above. As of December 31, 2023, our total unrecognized tax benefit was $14.6 million. A reconciliation of the beginning and ending unrecognized tax benefit balance is as follows (in thousands):
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 |
Increase in balance related to tax positions taken in prior year | 2,044 |
Increase in balance related to tax positions taken during current year | 2,100 |
Balance as of December 31, 2023 | $ | 14,554 |
Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2023 and 2022, 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, 2020 to present and December 31, 2019 to present, respectively. In addition, all 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 -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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