(11) Income Taxes

As of December 31, 2011, interest and penalties related to any uncertain tax positions have been insignificant. The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes. The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized is $1.0 million as of December 31, 2011, compared to $0.5 million as of December 31, 2010.

The following is a reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31, 2011, 2010 and 2009:


	2011		2010		2009
	(In thousands)
Beginning uncertain tax benefits	$	558	$	304		$ 48
Current year—increases		439		254		256
Current year—decreases		—		—		—

Ending uncertain tax benefits	$	997	$	558		$304

The Company files income tax returns in the U.S., Ireland and United Kingdom. The Company remains subject to tax examinations in the following jurisdictions at December 31, 2011:


Jurisdiction	Tax Years
United States		2008-2011
Ireland		2006-2011
United Kingdom		2010-2011

The Company expects gross liabilities of $48,000 to expire in 2012.

The components of loss from operations before taxes were as follows at December 31:


	2011			2010			2009
	(In thousands)
United States	$	1,019		$	1,987		$	162
Ireland and United Kingdom		(67,629	)		(252,077	)		(31,669	)

	$	(66,610	)	$	(250,090	)	$	(31,507	)

The expense (benefit) from income taxes shown in the accompanying consolidated statements of operations consists of the following for fiscal 2011, 2010 and 2009:


	2011			2010			2009
	(In thousands)
Current:
Federal-U.S.	$	3,908		$	1,068		$	121
State-U.S.		1,101			122			32
United Kingdom		—			—			(365	)

Total Current	$	5,009		$	1,190		$	(212	)

Deferred:
Federal-U.S.		(1,936	)		(1,604	)		(353	)
State-U.S.		(557	)		(87	)		(336	)
Ireland and United Kingdom		(5,566	)		(6,035	)		(3,540	)
Change in valuation allowance		5,566			6,035			3,540

Total Deferred	$	(2,493	)	$	(1,691	)	$	(689	)

	$	2,516		$	(501	)	$	(901	)

The expense (benefit) from income taxes differs from the amount computed by applying the statutory income tax rate to income before taxes due to the following for fiscal 2011, 2010 and 2009:


	2011			2010			2009
	(In thousands)
Benefits from taxes at statutory rate	$	(16,652	)	$	(62,523	)	$	(7,877	)
Rate differential		3,952			3,871			1,945
Research credits		—			(1,014	)		(897	)
Change in valuation reserves		7,120			6,035			3,540
Permanent & other		2,209			17			3,433
Warrant derivative liabilities		5,643			52,761			(1,406	)
Other		244			352			361

	$	2,516		$	(501	)	$	(901	)

The tax residency of Amarin Corporation plc migrated from the United Kingdom (UK) to Ireland in April 2008. As a result of the migration, unutilized UK trading losses at the date of migration are no longer available for offset against taxable profits. The Company is subject to corporate tax rate in Ireland of 25% for non-trading activities and 12.5% for trading activities. For the years ended December 31, 2011, 2010 and 2009, the Company applied the statutory corporate tax rate of 25% for Amarin Corporation plc, reflecting the non-trading tax rate in Ireland. However, for Amarin Pharmaceuticals Ireland Limited, a wholly-owned subsidiary of Amarin Corporation plc, the Company applied the 12.5% Irish trading tax rate.

The income tax effect of each type of temporary difference comprising the net deferred tax asset at December 31 is as follows:


	2011			2010
	(In thousands)
Deferred tax assets:
Net operating losses	$	32,841		$	27,171
Stock based compensation		5,706			2,997
Depreciation		40			132
Tax credits		6			30
Other reserves and accrued liabilities		53			422

Net deferred tax asset		38,646			30,752
Less: valuation allowance		(33,379	)		(27,978	)

	$	5,267		$	2,774

The Company assesses whether it is more-likely-than-not that the Company will realize its deferred tax assets. The Company determined that it was more-likely-than-not that the Irish, UK, and Israeli net operating losses and the related deferred tax assets would not be realized in future periods and a full valuation allowance has been provided for all periods.

The Company has combined Irish, UK, and Israeli net operating loss carryforwards of $175.7 million, which begin to expire in 2011. In addition, the Company has available U.S. Federal tax credit carryforwards of $1.2 million and state tax credit carryforwards of $1.4 million. These carryforwards which will expire between 2028 and 2030 may be used to offset future taxable income, if any. The Company believes that net operating losses attributable to Ester of $12.0 million are not likely to be realized in the future.