In accordance with the guidance pursuant to accounting for income taxes, a deferred tax asset or liability is determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax asset will be realized.


	Year Ended December 31,
	2020		2019		2018
U.S. Domestic	$	(162,664,355)	$	(120,809,112)	$	(94,798,019)
Foreign	(225,949)		—		—
Pretax loss from operations	$	(162,890,304)	$	(120,809,112)	$	(94,798,019)


	Year Ended December 31,
	2020		2019		2018
Current:
Federal	$	—	$	4,000	$	—
State	—		2,000		—
Foreign	—		—		2,170,000
	—		6,000		2,170,000
Deferred:
Federal	—		(263,000)
State	—		—		—
Foreign	—		—		—
	—		(263,000)		—
	$	—	$	(257,000)	$	2,170,000

The reconciliation of income taxes attributable to continuing operations computed at the statutory tax rates to income tax expense (benefit), using a 21% statutory tax rate for December 31, 2020, 2019 and 2018, is as follows:


	Year Ended December 31,
	2020		2019		2018
Income (benefit) taxes at statutory rates	$	(34,207,000)	$	(25,370,000)	$	(19,908,000)
State income tax, net of federal benefit	—		—		(4,000)
Foreign income taxes	—		—		2,170,000
Change in valuation allowance	21,428,000		25,457,000		20,898,000
Nondeductible loss on extinguishment of debt	14,450,000		—		—
Research and development tax credits	(2,650,000)		(3,838,000)		(3,170,000)
Change in fair value of warrants	—		—		(76,000)
Stock-based compensation	(1,953,000)		1,114,000		1,094,000
Uncertain tax positions	1,068,000		1,537,000		1,268,000
Deconsolidation of subsidiary	853,000		—		—
Expired NOLs and credits	468,000		616,000		2,176,000
Limited NOLs and credits	(368,000)		(616,000)		(2,176,000)
Change in tax rates	—		12,000		—
Foreign tax rate differential	(9,000)		—		—
Other	920,000		831,000		(102,000)
	$	—	$	(257,000)	$	2,170,000

The income tax benefit recorded during the year ended December 31, 2019 of $257,000 was principally due to a requirement under ASC Topic 740, Accounting for Income Taxes, that a company must consider all sources of income in order to determine the tax benefit resulting from a loss from continuing operations. As a result of the requirement under ASC 740-20-45-7, the pretax income which the Company generated from other comprehensive income was a source of income which resulted in the partial realization of the current year loss from continuing operations.

The Company early adopted ASU No. 2019-12 as of January 1, 2020. Among other provisions, ASU 2019-12 eliminated the requirement under ASC 740-20-45-7 to consider all sources of income in order to determine the tax benefit resulting from a loss from continuing operations.


	As of December 31,
	2020		2019
Deferred tax assets:
Capitalized research expense	$	5,250,000	$	6,300,000
NOL carryforwards	127,835,000		110,788,000
Research and development and other tax credits	13,242,000		11,737,000
Deferred revenue	1,628,000		1,506,000

Stock-based compensation	3,256,000		3,255,000
Acquired intangibles	757,000		889,000
Derivative liability	—		1,852,000
Interest expense	564,000		1,122,000
Investment in affiliated entity	542,000		645,000
Lease liability	4,283,000		4,722,000

Other	6,127,000		2,413,000
	163,484,000		145,229,000
Valuation allowance	(159,705,000)		(137,159,000)
Total deferred tax assets	3,779,000		8,070,000
Deferred tax liabilities:
Acquired intangibles	(179,000)		(160,000)

Right of use asset	(2,676,000)		(2,894,000)
Note discount	(469,000)		(2,862,000)
Convertible note	—		(1,381,000)
Fixed assets	(487,000)		(805,000)
Net deferred tax liabilities	$	(32,000)	$	(32,000)

As of December 31, 2020, the Company had federal, California and Pennsylvania tax net operating loss (NOL) carryforwards of $566.2 million, $68.6 million and $75.3 million, respectively, net of the net operating losses that will expire due to IRC Section 382 limitations. The aggregate federal net operating losses generated in 2018 and after for the amount of $270.3 million will carryforward indefinitely and be available to offset up to 80% of future taxable income each year, subject to certain modifications made by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) enacted in 2020. The federal NOL carryforward began to expire in 2021, and the California and Pennsylvania NOL carryforwards will begin and have begun to expire in 2028 and 2020, respectively, unless previously utilized.

In addition, as of December 31, 2020, the Company had federal and state research and development (R&D) tax credit carryforwards of $19.8 million and $3.2 million, respectively. The federal tax credit carryforwards will begin to expire in 2029. The California research tax credits do not expire.


Expiration Date:	Federal NOLs		State NOLs		Federal R&D		State R&D

2021	$	2.3	$	0.3	$	—	$	—
2022	6.1		0.4		—		—
2023	5.3		1.2		—		—
2024	14.5		9.1		—		—
2025 and thereafter	267.7		132.9		19.8		—
Indefinite	270.3		—		—		3.2
	$	566.2	$	143.9	$	19.8	$	3.2

Pursuant to Internal Revenue Code (IRC) Sections 382 and 383, annual use of the Company’s NOL and R&D credit carryforwards may be limited in the event that a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has completed an IRC Section 382/383 analysis regarding the limitation of NOL and R&D credit

carryforwards as of December 31, 2020. As a result of the analysis, the Company estimates that approximately $10.2 million of tax benefits related to NOL and R&D carryforwards will expire unused. Accordingly, the related NOL and R&D credit carryforwards have been removed from deferred tax assets, accompanied by a corresponding reduction of the valuation allowance. Due to the existence of the valuation allowance, limitations created by current and future ownership changes, if any, related to the Company's operations in the United States will not impact its effective tax rate. Any additional ownership changes may further limit the ability to use the NOL and R&D carryforwards.

The Tax Cuts and Jobs Act of 2017 subjects a U.S. stockholder to tax on Global Intangible Low-Taxed Income (GILTI) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. For 2020, the Company did not generate any GILTI due to losses earned by its foreign subsidiary.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits federal NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows federal NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. Due to the Company's history of net operating losses, the CARES Act is not expected to have a material impact on the Company's financial statements.


	Year ended December 31,
	2020		2019		2018
Balance at beginning of the year	$	11,204,000	$	9,632,000	$	8,313,000
Increases related to current year tax positions	1,043,000		1,575,000		1,319,000
Increases (decreases) related to prior year tax positions	27,000		(3,000)		—
Other	(64,000)		—		—
Balance at end of the year	$	12,210,000	$	11,204,000	$	9,632,000

The amount of unrecognized tax benefits that, if recognized and realized, would affect the effective tax rate was $10.9 million, $9.9 million and $8.3 million as of December 31, 2020, 2019 and 2018, respectively, subject to valuation allowances. The Company has not recorded any interest and penalties on the unrecognized tax positions as the Company has continued to generate net operating losses after accounting for the unrecognized tax benefits. The Company does not anticipate that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in multiple state jurisdictions. With few exceptions, the Company is no longer subject to United States federal income tax examinations for years before 2017 and state and local income tax examinations before 2016. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the NOL carryforward amount. The Company is not currently under Internal Revenue Service (“IRS”), state or local tax examination.