(11) Income Taxes

As of December 31, 2012, 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 $1.2 million as of December 31, 2012, compared to $1.0 million as of December 31, 2011.

The following is a reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31, 2012, 2011 and 2010:


	2012			2011		2010
	(In thousands)
Beginning uncertain tax benefits	$	997		$	558	$	304
Current year—increases		294			439		254
Current year—decreases		(48	)		—		—

Ending uncertain tax benefits	$	1,243		$	997	$	558

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, 2012:


Jurisdiction	Tax Years
United States		2009-2012
Ireland		2007-2012
United Kingdom		2011-2012

The Company expects gross liabilities of $256,000 to expire in 2013.

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


	2012			2011			2010
	(In thousands)
United States	$	1,874		$	1,019		$	1,987
Ireland and United Kingdom		(171,942	)		(67,629	)		(252,077	)

	$	(170,068	)	$	(66,610	)	$	(250,090	)

The expense (benefit) from income taxes shown in the accompanying consolidated statements of operations consists of the following for fiscal 2012, 2011 and 2010:


	2012			2011			2010
	(In thousands)
Current:
Federal-U.S.	$	10,265		$	3,908		$	1,068
State-U.S.		2,565			1,101			122

Total Current	$	12,830		$	5,009		$	1,190

Deferred:
Federal-U.S.		(2,803	)		(1,936	)		(1,604	)
State-U.S.		(911	)		(557	)		(87	)
Ireland and United Kingdom		(22,515	)		(5,566	)		(6,035	)
Change in valuation allowance		22,515			5,566			6,035

Total Deferred	$	(3,714	)	$	(2,493	)	$	(1,691	)

	$	9,116		$	2,516		$	(501	)

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 2012, 2011 and 2010:


	2012			2011			2010
	(In thousands)
Benefits from taxes at statutory rate	$	(42,517	)	$	(16,652	)	$	(62,523	)
Rate differential		13,249			3,952			3,871
Research credits		—			—			(1,014	)
Change in valuation reserves		22,515			7,120			6,035
Permanent & other		6,809			2,209			17
Warrant derivative liabilities		8,904			5,643			52,761
Other		156			244			352

	$	9,116		$	2,516		$	(501	)

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, 2012, 2011 and 2010, 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:


	2012			2011
	(In thousands)
Deferred tax assets:
Net operating losses	$	55,086		$	32,841
Stock based compensation		9,155			5,706
Depreciation		(189	)		40
Tax credits		5			6
Other reserves and accrued liabilities		818			53

Net deferred tax asset		64,875			38,646
Less: valuation allowance		(55,894	)		(33,379	)

	$	8,981		$	5,267

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 $315.6 million, which began to expire in 2011. In addition, the Company has available U.S. Federal tax credit carryforwards of $0.4 million and state tax credit carryforwards of $2.3 million. These carryforwards which will expire between 2029 and 2031 may be used to offset future taxable income, if any.

The Company expects to recognize a tax benefit related to the extension of the research and development credits in the first quarter of 2013 and expects to record a discrete benefit of approximately $1.0 million.