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

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%

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

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

months.