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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income (loss) before the provision for (benefit from) income taxes is summarized as follows (in thousands):
Year Ended December 31,
202120202019
Domestic$(25,983)$19,663 $(18,086)
Foreign1,442 1,387 914 
Ending balance$(24,541)$21,050 $(17,172)
The provision for income taxes were as follows (in thousands):
Year Ended December 31,
202120202019
Current tax expense
Federal$— $— $— 
State2 32 24 
Foreign(10)265 331 
Total current tax (benefit) expense(8)297 355 
Deferred tax expense:
Federal— — — 
State— — — 
Foreign(277)— — 
Total deferred tax (benefit) expense(277)— — 
Provision for (benefit from) income taxes$(285)$297 $355 
The provision for income taxes differs from the amount computed by applying the statutory federal tax rate as follows (in thousands):
Year ended December 31,
202120202019
Tax benefit at U.S. statutory rate$(5,154)$4,402 $(3,470)
State income taxes, net of federal benefit10 32 24 
Foreign income and withholding taxes79 89 (22)
Expenses from resolution of certain tax audits and expiration of statute of limitations64 (32)(16)
Stock-based compensation(6,386)113 258 
Section 162(m)621 — — 
Expired attributes3,118 1,964 846 
Change in valuation allowance6,986 (5,857)(3)
Research and development credits(43)(261)(72)
Global Intangible Low-Taxed Income— 6 176 
Adoption of accounting principles— — 2,464 
Other420 (159)170 
Provision for (benefit from) income taxes$(285)$297 $355 
As a result of the Tax Cuts and Jobs Act (the Tax Act), foreign accumulated earnings that were subject to the mandatory transition tax as of December 31, 2017, can be repatriated to the U.S. without incurring further U.S. federal tax. The Tax Act moves towards a modified territorial tax system through the provision of a 100% dividend received deduction for the foreign-source portions of dividends received from controlled foreign subsidiaries. As a result, the Company continues to evaluate the indefinite reinvestment assertions with regards to unremitted earnings for our foreign subsidiaries. As of December 31, 2021, 44196 and 2019, the total undistributed earnings of the Company’s foreign subsidiaries were approximately $3.4 million, $3.5
million and $1.4 million, respectively. Historically, the Company has asserted its intention to indefinitely reinvest the undistributed earnings of foreign subsidiaries. The unrecognized deferred tax liability on the portion of the undistributed earnings considered indefinitely reinvested is not material.
Deferred income taxes result from differences in the recognition of expenses for tax and financial reporting purposes, as well as operating loss and tax credit carryforwards. Significant components of our deferred income tax assets as of the periods presented are as follows (in thousands):
December 31, 2021December 31, 2020
Deferred tax assets
Accrued expense and others$4,197 $4,083 
Stock-based compensation4,605 1,230 
Net operating losses29,092 21,622 
Tax credit carryforwards6,263 6,726 
Fixed assets— 167 
Interest expense and other— — 
Gross deferred tax assets$44,157 $33,828 
Valuation allowance(35,080)(26,257)
Total deferred tax assets$9,077 $7,571 
Deferred tax liabilities
Section 481(a) adjustment$(461)$(110)
Deferred commissions(8,339)(7,461)
Total deferred tax liabilities$(8,800)$(7,571)
Net deferred tax assets$277 $— 
The Company assesses the realizability of deferred tax assets based on the available evidence, including a history of taxable income and estimates of future taxable income. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that all or some portion of deferred tax assets will not be realized. Due to the losses the Company generated in prior years, management believes it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company established a full valuation allowance on its U.S. net deferred tax assets. The valuation allowance increased by $8.8 million for the year ended December 31, 2021. The Company has not recorded a valuation allowance on its net UK deferred tax assets as the Company believes it will generate sufficient future taxable income to realize the deferred tax asset in the UK.
As of December 31, 2021, the Company had net operating loss carryforwards of approximately $116.8 million for federal income tax purposes, of which a portion will begin to expire in 2022 if unused. As a result of Tax Act, $77.1 million of the federal net operating loss carryovers will carryover indefinitely and are limited to 80% of taxable income. The Company had net operating loss carryforwards of approximately $75.4 million for state income tax purposes, which will begin to expire in the year 2022 if unused.
As of December 31, 2021, the Company has research and development credit carryforwards of approximately $4.4 million for federal income tax and $4.7 million for state income tax purposes. The federal research and development tax credit will begin to expire in 2022 if unused. State research and development tax credits carryforward indefinitely.
The federal and state net operating loss carryforwards may be subject to significant limitations under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, and similar provisions under state law. The Tax Reform Act of 1986 contains provisions that limit the federal net operating loss carryforwards that may be used in any given year in the event of special occurrences, including significant ownership changes. The Company completed a review of any potential limitation on the use of its net operating losses under Section 382 through December 31, 2021. Based on such review, the Company does not believe Section 382 of the Internal Revenue Code will adversely impact its ability to use its current net operating losses to offset future taxable income, if any,
The Company complies with ASC 740-10, Accounting for Uncertainty in Income Taxes, which prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return. This pronouncement sets a “more likely than not” criterion for recognizing the tax benefit of uncertain tax positions. We do not anticipate any significant changes to unrecognized tax benefits in the next 12 months. The Company recognize interest and penalties related to uncertain tax positions in income tax expense.
A reconciliation of the beginning and ending balance of total unrecognized tax position is as follows (in thousands):
Year Ended December 31,
202120202019
Beginning balance$2,397 $2,206 $2,061 
Decrease related to prior year tax provisions(151)— — 
Increase related to current year tax positions341 236 $187 
Decrease due to lapse of applicable statute of limitations(72)(45)$(42)
Ending balance$2,515 $2,397 $2,206 
The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company recognized an immaterial amount of interest and penalties associated with unrecognized tax benefits in 2021, 2020 and 2019. There are no tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date. If recognized, $0.4 million would affect the Company’s effective tax rate.

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various foreign jurisdictions. As of December 31, 2021, all of the years remain open to examination by the federal and state tax authorities for three or four years from the tax year in which net operating losses or tax credits are utilized. There have been no examinations of our income tax returns by any tax authority.