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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Taxes [Abstract] |
Income Taxes | 8. Income Taxes U.S. Federal Income Tax Reform On December 22, 2017, in response to the enactment of the 2017 Tax Act (see Note 2), the SEC staff issued SAB 118 that allows OncoCyte to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. OncoCyte is currently analyzing the 2017 Tax Act, and in certain areas, has made reasonable estimates of the effects on its financial statements and tax disclosures, including and changes to OncoCyte’s existing deferred tax balances, for the year ended December 31, 2017. OncoCyte remeasured certain deferred tax assets and liabilities based on the enacted tax rate at which they are expected to reverse in the future. The estimated tax affected amount related to the remeasurement of these balances was a reduction of OncoCyte’s net deferred tax assets by $6.8 million with a corresponding decrease in the valuation allowance by the same amount, recognized as of December 31, 2017, as discussed below. 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. As of December 31, 2017, the federal portion of the deferred tax assets and liabilities for 2017 were re-rated from 34 percent to 21 percent pursuant to the 2017 Tax Act. OncoCyte has filed standalone U.S. federal income tax returns since its inception. For California purposes, OncoCyte’s activity for 2015 and 2016 was included in BioTime’s California Combined tax return. As a result of OncoCyte’s deconsolidation from BioTime on February 17, 2017, (see Note 1), OncoCyte will file a separate California return for tax year 2017. The provision for state income taxes has been determined as if OncoCyte had filed separate tax returns for the periods presented. Accordingly, the effective tax rate of OncoCyte in future years could vary from its historical effective tax rates depending on the future legal structure of OncoCyte and related tax elections. The deferred tax assets, including the operating loss and credit carryforwards, generated by OncoCyte, will remain with OncoCyte. The primary components of the deferred tax assets and liabilities at December 31, 2017 and 2016 were as follows (in thousands):
|  | 2017 |  |  | 2016 |
Deferred liabilities: |  |  |  |  |  |
Available-for-sale securities |  | $ | - |  |  | $ | (761 | )
Total deferred tax liabilities |  |  | - |  |  |  | (761 | )
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  |  | 11,414 |  |  |  | 11,730 |
Research and development credit carryforwards |  |  | 2,141 |  |  |  | 1,765 |
Patents and fixed assets |  |  | 268 |  |  |  | 179 |
Stock-based compensation and accrued payroll |  |  | 1,260 |  |  |  | 1,041 |
Valuation Allowance |  |  | (15,083 | ) |  |  | (13,954 | )
Total deferred tax assets |  |  | - |  |  |  | 761 |
Net deferred tax asset (liability) |  | $ | - |  |  | $ | - |
Due to losses incurred for all periods presented, OncoCyte did not record any provision or benefit for income taxes. Income taxes differed from the amounts computed by applying the U.S. federal income tax of 34% to pretax losses from operations as a result of the following:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Computed tax benefit at federal statutory rate |  |  | 34 | % |  |  |  | 34 | % |  |  |  | 34 | % |
Re-rate of federal net deferred tax assets |  |  | (35) | % |  |  |  | 0 | % |  |  |  | 0 | % |
Permanent differences |  |  | (8) | % |  |  |  | (1) | % |  |  |  | (9) | % |
State tax benefit |  |  | 3 | % |  |  |  | 2 | % |  |  |  | 15 | % |
Research and development credits |  |  | 1 | % |  |  |  | 2 | % |  |  |  | 2 | % |
Other |  |  | 0 | % |  |  |  | 7 | % |  |  |  | 3 | % |
Adjusted basis for available-for-sale-securities |  |  | 11 | % |  |  |  | 0 | % |  |  |  | 0 | % |
Change in valuation allowance |  |  | (6) | % |  |  |  | (44) | % |  |  |  | (45) | % |
|  |  | - | % |  |  |  | - | % |  |  |  | - | % |
As of December 31, 2017, OncoCyte has net operating loss carryforwards of approximately $47.8 million for U.S. federal income tax purposes and $15.6 million for state income tax purposes. Federal net operating loss carryforwards expire in varying amounts from 2030 and 2037, and state carryforwards expire from 2029 and 2037. In addition, as of December 31, 2017, OncoCyte has research and development credit carryforwards for federal and state purposes of $1.0 million and $1.1 million, respectively. The federal credits will expire between 2030 and 2037, while the state credits have no expiration. During 2017, OncoCyte sold 266,442 BioTime common shares, in at-the-market transactions which resulted in taxable loss of approximately $301,000. No BioTime common shares were sold in 2016. During 2015, OncoCyte sold 259,712 BioTime common shares in at-the-market transactions which resulted in taxable loss of approximately $397,000. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. OncoCyte established a full valuation allowance for all periods presented due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets. The change in the valuation allowance was $1.1 million and $5.1 million for the years ended December 31, 2017 and 2016, respectively. Other Income Tax Matters Internal Revenue Code Section 382 places a limitation (“Section 382 Limitation”) on the amount of taxable income that can be offset by net operating loss (“NOL”) 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 control change, a loss corporation cannot deduct NOL carryforwards in excess of the Section 382 Limitation. Due to these “change in ownership” provisions, utilization of the NOL and tax credit carryforwards may be subject to an annual limitation regarding their utilization against taxable income in future periods. OncoCyte may be subject to potential income tax examination by U.S. federal or states authorities. These potential examinations may include inquiries regarding the timing and amount of deductions, and compliance with U.S. federal and state tax laws. In general, OncoCyte is no longer subject to tax examination by major taxing authorities for years before 2013. Although the statute is closed for purposes of assessing additional income and tax in those years, the taxing authorities may still make adjustments to the net operating loss and credit carryforwards used in open years. Any potential examinations may include inquiries regarding the timing and amount of deductions, and compliance with U.S. federal and state tax laws.

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