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Income Taxes (Notes) | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The loss before income taxes is as follows (in thousands):
| As of December 31,
| 2018 |  | 2017
U.S. | $ | (17,179 | ) |  | $ | 265 |
Non - U.S. | (11,869 | ) |  | (23,766 | )
| $ | (29,048 | ) |  | $ | (23,501 | )
The components of federal and state income tax expense are as follows (in thousands):
| As of December 31,
| 2018 |  | 2017
Current |  |  |
Federal | $ | (106 | ) |  | $ | 76 |
State | 45 |  |  | 138 |
Foreign | — |  |  | — |
Total current | (61 | ) |  | 214 |
Deferred expense |  |  |
Federal | (747 | ) |  | — |
State | (570 | ) |  | 39 |
Foreign | — |  |  | — |
Total deferred | (1,317 | ) |  | 39 |
Total income tax expense | $ | (1,378 | ) |  | $ | 253 |
The components of net deferred tax assets and liabilities are as follows (in thousands):
| As of December 31,
| 2018 |  | 2017
Net operating loss carryforwards | $ | 4,464 |  |  | $ | 1,028 |
Tax credit carryforwards | 134 |  |  | 345 |
Stock-based compensation | 2,223 |  |  | 2,550 |
Licensing deduction deferral | 5,961 |  |  | 2,105 |
Other | 56 |  |  | 395 |
Gross deferred tax assets | 12,838 |  |  | 6,423 |
Valuation allowance | (11,410 | ) |  | (4,658 | )
Net deferred tax asset | $ | 1,428 |  |  | $ | 1,765 |
The components of net deferred tax liabilities are as follows (in thousands):
| As of December 31,
| 2018 |  | 2017
In-process research and development not subject to future amortization for tax purposes | $ | 1,785 |  |  | $ | 3,438 |
Gross deferred tax liability | $ | 1,785 |  |  | $ | 3,438 |
The net deferred tax liabilities are as follows (in thousands):
| As of December 31,
| 2018 |  | 2017
Net deferred tax asset | $ | 1,428 |  |  | $ | 1,765 |
Gross deferred tax liability | 1,785 |  |  | 3,438 |
Net deferred tax liability | $ | 357 |  |  | $ | 1,673 |
The provision for income taxes differs from the provision computed by applying the federal statutory rate to net loss before income taxes as follows:
| As of December 31,
| 2018 |  | 2017
U.S. federal statutory income tax rate | (21.0 | )% |  | (34.0 | )%
State and local taxes, net of federal benefit | (1.0 | )% |  | 0.4 | %
Foreign rate differential | 8.6 | % |  | 34.4 | %
Permanent differences | (1.5 | )% |  | 1.1 | %
Tax rate change and true-up | (13.9 | )% |  | 0.3 | %
Other | 0.1 | % |  | 0.2 | %
Valuation allowance | 23.5 | % |  | 0.1 | %
Tax credits | 0.5 | % |  | (1.4 | )%
Effective income tax rate | (4.7 | )% |  | 1.1 | %
At December 31, 2018, the Company had domestic federal and state net operating loss carryforwards of approximately $19.7 million and $3.7 million, respectively, available to reduce future taxable income, which expire beginning in 2027. The Company also had federal research and development tax credit carryforwards of approximately $0.1 million, available to reduce future tax liabilities and which expire at various dates beginning in 2035. The income tax expense for the year ended December 31, 2018 and 2017 relates to both the indefinite lived deferred tax liabilities and the December 22, 2017 enactment of the Tax Cuts and Jobs Act. Under the provisions of the Internal Revenue Code, the net operating losses (“NOL”) and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, respectively, as well as similar state tax provisions. This could limit the amount of tax attributes that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financings since its inception, which may have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future. Utilization of the net operating loss and tax credits carryforwards may be limited by “ownership change” rules, as defined in Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. This annual limitation may result in the expiration of the net operating losses and credits before utilization. In assessing the need for a valuation allowance the Company may utilize indefinite-lived deferred tax liabilities from an indefinite-lived intangible asset as a future source of income. The Company’s IPR&D, as recorded in acquisition accounting, can be utilized as a source of income arising from the future reversal of temporary difference that can be offset against post 2017 indefinite-lived NOLs. Therefore, the Company is permitted to offset the indefinite-lived DTL up to the 80 percent limitation for NOL’s generated subsequent to January 1, 2018. The valuation allowance increased by $1.4 million for the year ended December 31, 2018 as a result of the impairment of one of the Company's indefinite-lived intangible assets and changes in the Company's state apportionment. The Company files income tax returns in the United States and various state jurisdictions. The Company is subject to tax examinations for the 2014 tax year and beyond. The Company does not recognize tax benefits that are not more-likely-than-not to be supported based upon the technical merits of the tax position taken. In assessing its unrecognized tax benefits, the Company has analyzed its tax return filing positions in all of the federal, state and foreign filing jurisdictions where it is required to file income tax returns, as well as all open years in those jurisdictions. The following table indicates the changes to the Company’s unrecognized tax benefits (in thousands):
| As of December 31,
| 2018 |  | 2017
Beginning of the Year - unrecognized tax benefits | $ | 72 |  |  | $ | — |
Increase/(Decrease) - prior year tax positions | (17 | ) |  | 44 |
Increase - current year tax positions | — |  |  | 28 |
End of the Year - unrecognized tax benefits | $ | 55 |  |  | $ | 72 |
The unrecognized tax benefits, if recognized and in absence of full valuation allowance, would impact the income tax provision by $55,000 and $72,000 as of December 31, 2018 and 2017, respectively. As of December 31, 2018, the Company does not believe that it is reasonably possible that its unrecognized tax benefits would significantly change in the following 12 months. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized in the near term. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. On December 22, 2017, the 2017 Tax Cuts and Jobs Act (Tax Act) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. The Company is required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring the Company's U.S. deferred tax assets and liabilities, as well as reassessing the net realizability of the Company's deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed the Company to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As a result, the Company previously provided a provisional estimate of the effect of the Tax Act in the Company's financial statements. In the fourth quarter of 2018, we completed our analysis to determine the effect of the Tax Act and recorded no material adjustments as of December 31, 2018.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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