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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes |
1 2. | Income Taxes
For the years ended December 31, 2021, 2020 and 2019, 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, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Tax at statutory federal rate |  | $ | (46,343 | ) |  | $ | (47,728 | ) |  | $ | (42,997 | )
State tax, net of federal benefit |  |  | (8,683 | ) |  |  | (8,218 | ) |  |  | (9,823 | )
Research and development credits |  |  | (4,173 | ) |  |  | (4,327 | ) |  |  | (4,855 | )
Stock-based compensation expense |  |  | 4,584 |  |  |  | 4,675 |  |  |  | 2,906 |
Non-deductible compensation |  |  | 1,970 |  |  |  | 1,455 |  |  |  | 4,720 |
Change in valuation allowance |  |  | 51,459 |  |  |  | 53,621 |  |  |  | 49,479 |
Other |  |  | 1,186 |  |  |  | 522 |  |  |  | 570 |
Provision for income taxes |  | $ | — |  |  | $ | — |  |  | $ | — |
Deferred income tax assets and liabilities arising from differences between accounting for financial statement purposes and tax purposes, less valuation allowance at year-end are as follows (in thousands):
|  | December 31, |
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforward |  | $ | 294,189 |  |  | $ | 251,971 |
Research and development credits |  |  | 55,789 |  |  |  | 49,683 |
Stock-based compensation |  |  | 23,342 |  |  |  | 20,211 |
Lease liabilities |  |  | 2,564 |  |  |  | 4,330 |
Other |  |  | 3,953 |  |  |  | 3,777 |
Total gross deferred tax assets |  |  | 379,837 |  |  |  | 329,972 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Right-of-use lease assets |  |  | (2,420 | ) |  |  | (4,014 | )
Total gross deferred tax liabilities |  |  | (2,420 | ) |  |  | (4,014 | )
Valuation allowance |  |  | (377,417 | ) |  |  | (325,958 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
We have established a valuation allowance to offset net deferred tax assets as of December 31, 2021 and 2020 due to the uncertainty of realizing future tax benefits from such assets. As of December 31, 2021, we had federal and state net operating loss (“NOL”) carryforwards of $1.2 billion and $743.4 million, respectively. The federal NOL carryforwards consist of $547.4 million generated before January 1, 2018, which began to expire in 2021, and $664.2 million that can be carried forward indefinitely, but are subject to the 80% taxable income limitation. The state NOL carryforwards will begin to expire in 2028. As of December 31, 2021, we had federal and state research and development credit carryforwards of $45.3 million and $20.4 million, respectively. The federal research and development credit carryforwards will begin to expire in 2022. The state research and development credit carryforwards will begin to expire in 2023. Internal Revenue Code (“IRC”) Sections 382 and 383 place 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. Generally, after a change in control, a loss corporation cannot deduct NOL and credit carryforwards in excess of the IRC Sections 382 and 383 limitation. State jurisdictions have similar rules. We have previously performed an analysis of IRC Sections 382 and 383 through 2018 and determined there were ownership changes in 2007, 2011 and 2013. We are currently in the process of updating our IRC Sections 382 and 383 analysis through 2021. The limitation in the federal and state NOL and research and development credit carryforwards that expire unused would reduce the deferred tax assets, which are fully offset by a valuation allowance. We file U.S. and state income tax returns with varying statutes of limitations. The tax years from 2001 to 2021 remain open to examination due to the carryover of unused NOL carryforwards and tax credits. A reconciliation of our unrecognized tax benefits is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Balance at beginning of year |  | $ | 7,406 |  |  | $ | 4,784 |  |  | $ | 2,385 |
Additions for tax positions of prior years |  |  | 107 |  |  |  | 341 |  |  |  | 147 |
Additions based on tax positions related to current year |  |  | 2,118 |  |  |  | 2,281 |  |  |  | 2,252 |
Balance at end of year |  | $ | 9,631 |  |  | $ | 7,406 |  |  | $ | 4,784 |
Due to our valuation allowance, the $9.6 million of unrecognized tax benefits would not affect the effective tax rate, if recognized. It is the Company’s practice to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2021, we had no accrued interest and penalties related to uncertain tax positions. We do not expect any material changes to the estimated amount of liability associated with our uncertain tax positions within the next 12 months. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted and signed into law in response to the COVID-19 pandemic. GAAP requires recognition of the tax effects of new legislation during the reporting period that includes the enactment date. The CARES Act includes changes to the tax provisions that benefits business entities and makes certain technical corrections to the 2017 Tax Cuts and Jobs Act. The tax relief measures for businesses include a five-year net operating loss carryback, suspension of the annual deduction limitation of 80% of taxable income from net operating losses generated in a tax year beginning after December 31, 2017, changes in the deductibility of interest, acceleration of alternative minimum tax credit refunds, payroll tax relief, technical corrections on net operating loss carryforwards for fiscal year taxpayers and allows accelerated deduction qualified improvement property. The CARES Act also provides other non-tax benefits to assist those impacted by the pandemic. We evaluated the impact of the CARES Act and determined that there was no material impact for the year ended December 31, 2021. On June 29, 2020, California Assembly Bill 85 was signed into law. The legislation suspends the California net operating loss deductions for 2020, 2021, and 2022 for certain taxpayers and imposes a limitation of certain California tax credits for 2020, 2021, and 2022. The legislation disallows the use of California net operating loss deductions if the taxpayer recognizes business income, and its adjusted gross income is greater than $1.0 million. The carryover periods for net operating loss deductions disallowed by this provision will be extended. Additionally, any business credit will only offset a maximum of $5.0 million of California tax. In 2022, California enacted Senate Bill 113, which removed the net operating loss suspension and limited use of business tax credits for 2022. Senate Bill 113 will have no income tax impact, as we continue to record a full valuation allowance against the deferred tax assets due to our cumulative tax losses. On December 27, 2020, the “Consolidated Appropriations Act, 2021” was enacted and signed into law to further COVID-19 economic relief and extend certain expiring tax provisions. The relief package includes a tax provision clarifying that businesses with forgiven PPP loans can deduct regular business expenses that are paid for with the loan proceeds. Additional pandemic relief tax measures include an expansion of the employee retention credit, enhanced charitable contribution deductions, and a temporary full deduction for business expenses for food and beverages provided by a restaurant. The provisions did not have a material impact on our financial statements for the year ended December 31, 2021.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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