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Note 9 - Income Taxes | 12 Months Ended
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Dec. 31, 2017
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
9 . | Income Taxes
For the years ended December 31, 2017, 2016 and 2015, we did not record a provision for income taxes due to a full valuation allowance against our deferred tax assets . The difference between the provision for income taxes and income taxes computed using the effective U.S. federal statutory rate is as follows (in thousands):
|  | December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Tax at statutory federal rate |  | $ | ( 67,145 | ) |  | $ | ( 58,868 | ) |  | $ | ( 33,181 | )
State tax, net of federal benefit |  |  | ( 6,203 | ) |  |  | 2,013 |  |  |  | ( 5,753 | )
Research and development credits |  |  | ( 5,962 | ) |  |  | ( 4,206 | ) |  |  | ( 2,757 | )
Stock-based compensation expense |  |  | 3,151 |  |  |  | 2,694 |  |  |  | 894 |
Non-deductible compensation |  |  | — |  |  |  | 1,864 |  |  |  | — |
Change in valuation allowance |  |  | 3,241 |  |  |  | 55,173 |  |  |  | 40,445 |
Impact of the 2017 Tax Act |  |  | 74,361 |  |  |  | — |  |  |  | — |
Other |  |  | ( 1,443 | ) |  |  | 1,330 |  |  |  | 352 |
Provision for income taxes |  | $ | — |  |  | $ | — |  |  | $ | — |
Deferred income tax assets and liabilities arising from differences between accounting for fina ncial statement purposes and tax purposes, less valuation allowance at year-end are as follows (in thousands):
|  | December 31, |
|  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforward |  | $ | 134,659 |  |  | $ | 138,727 |
Research and development credits |  |  | 25,919 |  |  |  | 16,687 |
Stock-based compensation |  |  | 8,633 |  |  |  | 10,272 |
Other |  |  | 2,920 |  |  |  | 3,204 |
Total gross deferred tax assets |  |  | 172,131 |  |  |  | 168,890 |
Valuation allowance |  |  | (172,131 | ) |  |  | (168,890 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
We have established a valuation allowance to offset net deferred tax assets as of December 31, 2017 and 2016 due to the uncertainty of realiz ing future tax benefits from such assets. As of December 31, 2017, we had federal and state net operating loss (“NOL”) carryforwards of $557.9 million and $300.6 million, respectively, expiring beginning in 2018. As of December 31, 2017, we had federal and California state research and development credit carryforwards of $17.6 million and $10.5 million, respectively. The federal research and development credit carryforwards will begin to expire in 2022. The California state credits can be carried forward indefinitely. Internal Revenue Code (“IRC”) Section 382 and 383 places a limitation on the amount of taxable income that can be offset by NOL and credit carryforwards after a change in control (generally greater than 50% change in ownership within a three -year period) of a loss corporation. California has similar rules. Generally, after a change in control, a loss corporation cannot deduct NOL and credit carryforwards in excess of the IRC Section 382 and 383 limitation. We have performed an IRC Section 382 and 383 analysis and determined there were ownership changes in 2007, 2011, and 2013. We are currently in the process of completing the IRC Section 382 and 383 analysis for 2017. The limitation in the federal and state carryforwards associated with the NOL and credit carryforwards reduce the deferred tax assets, which are further offset by a full valuation allowance. The limitation can result in the expiration of the NOLs and credit carryforwards available as of December 31, 2017. We file U.S. and state income tax returns with varying statutes of limitations. The tax years from 1998 to 2017 remain open to examination due to th e carryover of unused NOL carryforwards and tax credits. The Tax Cuts and Jobs Act ( “2017 Tax Act”) was enacted in December 2017. The 2017 Tax Act, among other things, reduces the U.S. federal corporate tax rate from 35% to 21%, effective January 1, 2018, requires companies to pay a one -time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign earnings. We revalued our deferred tax assets as of December 31, 2017 based on a U.S. federal tax rate of 21%, which resulted in a reduction to our deferred tax assets of $74.3 million fully offset by a reduction to the valuation allowance. We are not required to pay a one -time transition tax on earnings of our foreign subsidiary as the foreign subsidiary has an accumulated deficit. As of December 31, 2017 and 2016, we had no accrued interest and penalties related to uncertain tax positions. As of both December 31, 2017 and 2016, we had unrecognized tax benefits of $0.1 million . We do not expect any material changes to the estimated amount of liability associated with our uncertain tax positions within the next 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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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