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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Acacia’s provision for income taxes for the fiscal periods presented consisted of the following (in thousands):
|  | 2016 |  | 2015 |  | 2014
Current: |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State taxes |  | 262 |  |  | 379 |  |  | 289 |
Foreign taxes |  | 17,926 |  |  | 4,421 |  |  | 5,359 |
Total current |  | 18,188 |  |  | 4,800 |  |  | 5,648 |
Deferred: |  |  |  |  |  |
Federal |  | — |  |  | — |  |  | (1,867 | )
State taxes |  | — |  |  | — |  |  | 131 |
Total deferred |  | — |  |  | — |  |  | (1,736 | )
Provision for income taxes |  | $ | 18,188 |  |  | $ | 4,800 |  |  | $ | 3,912 |
The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consist of the following at December 31, 2016 and 2015 (in thousands):
|  | 2016 |  | 2015
Deferred tax assets: |  |  |  |
Net operating loss and capital loss carryforwards and credits |  | $ | 83,323 |  |  | $ | 71,494 |
Stock compensation |  | 2,416 |  |  | 1,385 |
Fixed assets and intangibles |  | 14,343 |  |  | 1,359 |
Basis of investments in affiliates |  | 2,195 |  |  | 499 |
Accrued liabilities and other |  | 422 |  |  | 442 |
State taxes |  | 90 |  |  | 81 |
Total deferred tax assets |  | 102,789 |  |  | 75,260 |
Valuation allowance |  | (102,627 | ) |  | (75,179 | )
Total deferred tax assets, net of valuation allowance |  | 162 |  |  | 81 |
Deferred tax liabilities: |  |  |  |
Fixed assets and intangibles |  | — |  |  | — |
Other |  | (162 | ) |  | (81 | )
Total deferred tax liabilities |  | (162 | ) |  | (81 | )
Net deferred tax assets (liabilities) |  | $ | — |  |  | $ | — |
A reconciliation of the federal statutory income tax rate and the effective income tax rate is as follows:
|  | 2016 |  | 2015 |  | 2014
Statutory federal tax rate - (benefit) expense |  | (35 | )% |  | (35 | )% |  | (35 | )%
State income and foreign taxes, net of federal tax effect |  | 50 | % |  | 3 | % |  | 9 | %
Foreign tax credit |  | (49 | )% |  | (3 | )% |  | (8 | )%
Noncontrolling interests in operating subsidiaries |  | 1 | % |  | (1 | )% |  | — | %
Goodwill |  | — | % |  | 7 | % |  | — | %
Nondeductible permanent items |  | — | % |  | — | % |  | 1 | %
Expired capital loss carryforwards |  | — | % |  | 1 | % |  | — | %
Valuation allowance |  | 83 | % |  | 31 | % |  | 39 | %
|  | 50 | % |  | 3 | % |  | 6 | %
For the fiscal years ended December 31, 2016 and 2015, the Company recorded full valuation allowances against its net deferred tax assets due to uncertainty regarding future realization pursuant to guidance set forth in ASC 740, “Income Taxes.” In future periods, if the Company determines it will more likely than not be able to realize certain of these amounts, the applicable portion of the benefit from the release of the valuation allowance will generally be recognized in the statement of operations in the period the determination is made. At December 31, 2016, Acacia had U.S. federal and state income tax net operating loss carryforwards (“NOLs”) totaling approximately $147,770,000 and $32,821,000, expiring between 2025 and 2035, and 2017 and 2036, respectively, for which $0 and $441,000 of federal and state net operating losses are included as a deferred tax asset related to the tax benefits of stock option deductions and which will be credited to additional paid-in capital when realized as a reduction of taxes payable on Acacia’s tax return. In addition, $1,928,000 and $37,771,000 of federal and state net operating losses are not included as a deferred tax asset and will be credited to additional paid-in capital when realized as a reduction of taxes payable on Acacia’s tax return as they relate to unrecognized excess tax benefits (see additional information regarding the ordering of windfall tax benefits and use of the “with-and-without” approach below). Capital loss carryovers totaled $3,423,000 at December 31, 2015, expiring between 2017 and 2020. At December 31, 2016, approximately $29,318,000 of the U.S. federal NOLs, acquired in connection with the acquisition of ADAPTIX, Inc. in 2012, are subject to an annual utilization limitation of approximately $14,100,000, pursuant to the “change in ownership” provisions under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). As of December 31, 2016, Acacia had approximately $52,224,000 of foreign tax credits, expiring between 2017 and 2026, of which $20,313,000 has been utilized for financial statement purposes. Future realization of the credits as a reduction of taxes payable on Acacia’s tax return will result in an income tax benefit recognizable through additional paid in capital since the entire amount of the credits have been utilized for financial statement purposes under the “with-and-without approach.” In general, foreign taxes withheld may be claimed as a deduction on future U.S. corporate income tax returns, or as a credit against future U.S. income tax liabilities, subject to certain limitations. Tax expense for the periods presented, primarily reflects foreign taxes withheld on revenue agreements with licensees in foreign jurisdictions, a benefit totaling $1,735,000 from the reversal of the net deferred tax liability that existed at the beginning of the year (2014 only) and other state taxes. Excluding the impact of the change in valuation allowance, annual effective tax rates were (33)%, (28)% and (33)%, for fiscal years 2016, 2015 and 2014, respectively. The Company has elected to utilize the “with-and-without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit has reduced taxes payable. Under this approach, the windfall tax benefits would be recognized in additional paid in capital only if an incremental tax benefit is realized after considering all other tax benefits presently available to the Company. The deductions related to the exercise and vesting of equity-based incentive awards during the periods presented are, in general, available to offset taxable income on Acacia’s consolidated tax returns. Accordingly, the excess tax benefit related to the exercise and vesting of equity-based incentive awards for the periods presented was credited to additional paid-in capital, not taxes payable. For the years ended December 31, 2016, 2015 and 2014, the Company incurred approximately $1,319,000, $1,917,000 and $2,713,000, respectively, of net short falls from the exercise and vesting of equity-based incentive awards, of which $1,319,000, $1,917,000 and $2,713,000, respectively, was recorded against its additional paid-in capital, subject to a full valuation allowance, with no impact to the income statement. Acacia is subject to taxation in the U.S. and in various state jurisdictions and incurs foreign tax withholdings on revenue agreements with licensees in certain foreign jurisdictions. With no material exceptions, Acacia is no longer subject to U.S. federal or state examinations by tax authorities for years before 2001. The California Franchise Tax Board is auditing the 2011 and 2012 California combined income tax returns. The audit is in process and no findings or adjustments have been proposed. At December 31, 2016 and 2015, the Company had total unrecognized tax benefits of approximately $1,355,000 and $2,127,000, including a recorded noncurrent liability of $85,000, related to unrecognized tax benefits primarily associated with state taxes. No interest and penalties have been recorded for the unrecognized tax benefits as of December 31, 2016. At December 31, 2016, if recognized, approximately $1,355,000, net of valuation analysis, would impact the Company’s effective tax rate. The Company does not expect that the liability for unrecognized tax benefits will change significantly within the next 12 months. The change in total unrecognized tax benefits as of December 31, 2016 was due to a lapse of the applicable statute of limitations related to an unrecognized benefit originating in a prior period. Acacia recognizes interest and penalties with respect to unrecognized tax benefits in income tax expense. Acacia has identified no uncertain tax position for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months.

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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=65882285&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=65882285&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=65882285&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=65882285&loc=d3e32537-109319 + Details
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