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INCOME TAXES | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The domestic and foreign components of loss before income taxes were as follows (in thousands):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Domestic | $ | (185,216) |  |  | $ | (126,624) |  |  | $ | (77,354) |
Foreign | 7,225 |  |  | 5,847 |  |  | (18,065) |
Loss before income taxes | $ | (177,991) |  |  | $ | (120,777) |  |  | $ | (95,419) |
Income tax expense consisted of the following (in thousands):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Income tax expense: |  |  |  |  |
Current: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | — |  |  | 133 |  |  | — |
Foreign | 886 |  |  | 686 |  |  | — |
Subtotal | 886 |  |  | 819 |  |  | — |
Deferred: |  |  |  |  |
Federal | — |  |  | — |  |  | — |
State | — |  |  | — |  |  | — |
Foreign | (580) |  |  | (474) |  |  | — |
Subtotal | (580) |  |  | (474) |  |  | — |
Income tax expense | $ | 306 |  |  | $ | 345 |  |  | $ | — |
The difference between the income tax expense and the amount computed by applying the federal statutory income tax rate to loss before income taxes is explained as follows (in thousands):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Tax at federal statutory rate | $ | (37,372) |  |  | $ | (25,363) |  |  | $ | (20,038) |
State taxes, net | (6,734) |  |  | (3,168) |  |  | (9,597) |
Foreign rate differential | 362 |  |  | 376 |  |  | (665) |
Global Intangible Low-taxed Income | 637 |  |  | 1,335 |  |  | — |
Non-deductible stock-based compensation | 2,770 |  |  | 4,232 |  |  | 2,817 |
Research credits | (5,230) |  |  | (3,657) |  |  | (3,429) |
Change in valuation allowance | 45,373 |  |  | 26,537 |  |  | 29,655 |
Other | 500 |  |  | 53 |  |  | 1,257 |
Income tax expense | $ | 306 |  |  | $ | 345 |  |  | $ | — |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
| December 31,
| 2021 |  | 2020
Assets: |  |  |
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 159,740 |  |  | $ | 164,276 |
Research and development tax credit carryforwards | 35,260 |  |  | 27,679 |
Stock-based compensation | 6,691 |  |  | 5,321 |
Deferred revenue | 61,114 |  |  | 20,681 |
Fixed assets | 10,130 |  |  | 10,525 |
Lease liability | 11,279 |  |  | 10,251 |
Accruals and reserves | 1,119 |  |  | 430 |
Other | 106 |  |  | 308 |
Total deferred tax asset | 285,439 |  |  | 239,471 |
Valuation allowance | 259,820 |  |  | 214,351 |
Deferred tax assets | 25,619 |  |  | 25,120 |
Liabilities: |  |  |
Intangible assets | (13,856) |  |  | (14,321) |
Operating lease right-of-use assets | (17,348) |  |  | (17,510) |
Deferred tax liabilities | (31,204) |  |  | (31,831) |
Total net deferred tax liabilities | $ | (5,585) |  |  | $ | (6,711) |
The deferred tax assets and liabilities based on tax jurisdictions are presented on the Consolidated Balance Sheets as follows (in thousands):
| December 31,
| 2021 |  | 2020
Deferred tax assets (included in Other non-current assets on the Consolidated Balance Sheets) | $ | 1,060 |  |  | $ | 474 |
Deferred tax liabilities | (6,645) |  |  | (7,185) |
Net deferred tax liabilities | $ | (5,585) |  |  | $ | (6,711) |
A valuation allowance is recorded when it is more likely than not that all or some portion of the deferred income tax assets will not be realized. The Company regularly assesses the need for a valuation allowance against its deferred income tax assets by considering both positive and negative evidence related to whether it is more likely than not that the Company’s deferred income tax assets will be realized. In evaluating the Company’s ability to recover its deferred income tax assets within the jurisdiction from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. Accordingly, based upon the Company’s analysis of these factors the net deferred tax assets have been substantially offset by a valuation allowance. The valuation allowance increased by $45.5 million, $26.6 million and $29.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, Sangamo had net operating loss carryforwards for federal and state income tax purposes of approximately $605.6 million and $253.9 million, respectively. The federal net operating loss generated before 2018 will begin to expire in 2022 and will keep expiring through 2037, if not utilized. Federal net operating loss generated from 2018 will carry forward indefinitely. If not utilized, the state net operating loss carryforwards will begin to expire in 2029, respectively. The Company’s French net operating loss carryforward balance is $144.1 million, which carries over indefinitely. The Company also has federal and state research tax credit carryforwards of $28.2 million and $22.1 million, respectively. The federal research credits will begin to expire in 2022, while the state research credits have no expiration date. Utilization of the Company’s net operating loss carryforwards and research tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation could result in the expiration of the net operating loss carryforwards and research tax credit carryforwards before utilization. The Company’s policy is to reinvest the earnings of its non-U.S. subsidiaries in those operations. The Company does not provide for U.S. taxes on the earnings of foreign subsidiaries because the Company intends to reinvest such earnings offshore indefinitely. However, if these funds were repatriated, the Company would be required to accrue and pay applicable U.S. taxes and withholding taxes. Due to the cumulative losses generated in foreign countries there are no earnings to repatriate. The Company files federal and state income tax returns with varying statutes of limitations. The tax years from 2002 forward remain open to examination due to the carryover of net operating losses or tax credits. The Company also files the United Kingdom and French income tax returns, and the tax years from 2008 and thereafter remain open in the United Kingdom, and the tax years 2018 and thereafter in France are still subject to examination. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2021, the Company had $0.1 million accrued interest and/or penalties. The unrecognized tax benefits may change during the next year for items that arise in the ordinary course of business. In the event that any unrecognized tax benefits are recognized, the amount that would impact the effective tax rate was $1.2 million, $0.6 million, and zero as of December 31, 2021, 2020 and 2019, respectively. The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):
| December 31,
| 2021 |  | 2020 |  | 2019
Beginning balance | $ | 12,892 |  |  | $ | 11,630 |  |  | $ | 6,288 |
Additions based on tax positions related to the current year | 2,454 |  |  | 2,834 |  |  | 5,393 |
Additions for tax positions of prior years | 130 |  |  | 1,982 |  |  | — |
Reductions for tax positions of prior years | (414) |  |  | (3,554) |  |  | (51) |
Ending balance | $ | 15,062 |  |  | $ | 12,892 |  |  | $ | 11,630 |

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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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