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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income TaxesThe Company had a pre-tax U.S. book loss of $97.3 million, $41.5 million, and $0.6 million for the years ended December 31, 2021, 2020 and 2019 respectively. During the years ended December 31, 2021, 2020 and 2019, the Company did not record an income tax provision. The Company will continue to maintain a 100% valuation allowance on total deferred tax assets. The Company believes it is more likely than not that the related deferred tax assets will not be realized.
A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows:
Year Ended December 31,
202120202019
Income tax computed at federal statutory rate21.0 %21.0 %21.0 %
State taxes, net of federal tax benefit7.7 %7.4 %2.7 %
General business credit—federal5.3 %5.3 %295.9 %
Stock-based compensation(0.7)%(1.0)%(50.0)%
Other permanent differences(0.1)%(0.1)%(2.4)%
Change in valuation allowance(33.2)%(32.6)%(267.7)%
Effective income tax rate0.0 %— %(0.5)%
Net deferred tax assets and liabilities consisted of the following (in thousands):
December 31,
20212020
Deferred tax assets:
Net operating losses$51,554 $27,047 
Research and development credits13,989 7,617 
Accrued expenses292 291 
Other775 474 
Deferred rent— 266 
Lease liability2,000 — 
Stock based compensation1,816 428 
Total deferred tax assets70,426 36,123 
Deferred tax liabilities:
Fixed asset basis$(61)$(124)
Prepaid expenses(921)(558)
Right of use asset(1,760)— 
Total deferred tax liabilities(2,742)(682)
Valuation allowance67,684 35,441 
Net deferred taxes$— $— 
Net operating losses and tax credit carryforwards were as follows (in thousands):
December 31, 2021Expiration Year
Net operating losses, federal (starting from January 1, 2018)$155,231 Does not expire
Net operating losses, federal (before January 1, 2018)$29,486 
2035-2037
Net operating losses, state$182,964 
2035-2041
Tax credits, federal$14,094 
2036-2041
Tax credits, state$4,069 Does not expire
Utilization of the net operating loss carryforwards and research credit carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code (“IRC”) and similar state provisions. Annual limitations may result in the expiration of the net operating losses and tax credit carryforwards before they are utilized. The Company performed a IRC Section 382 analysis through December 31, 2021 and does not expect any previous ownership changes to result in a limitation that will reduce the total amount of net operating loss and
tax credit carryforwards disclosed that can be utilized. Subsequent ownership changes may affect the limitation in future years.
During the years ended December 31, 2021 and 2020, the Company recorded a full valuation allowance on federal and state deferred balances since management does not forecast the Company to be in a profitable position in the near future. Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2021 and 2020 related primarily to the increases in net operating loss carryforwards and research and development tax credit carryforwards and were as follows (in thousands):
Year Ended December 31,
20212020
Valuation allowance at the beginning of the year$35,441 $21,929 
Increases recorded to income tax provision32,243 13,512 
Valuation allowance at the end of the year$67,684 $35,441 
The Company’s U.S. federal and state income tax returns are generally subject to tax examinations for the tax years ended December 31, 2017 through December 31, 2021. There are currently no pending income tax examinations. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state tax authorities to the extent utilized in a future period.
The entire amount of the unrecognized tax benefits would not impact the Company’s effective tax rate if recognized. The Company's accounting policy is to include interest and penalties as a component of tax expense. During the years ended December 31, 2021, 2020 and 2019, the Company did not recognize accrued interest and penalties related to unrecognized tax benefits. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease during the next 12 months.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Year Ended December 31,
202120202019
January 1$2,007 $1,355 $855 
Additions based on tax positions related to current year1,081 513 570 
Additions (reductions) for tax positions of prior year417 139 (70)
December 31$3,505 $2,007 $1,355 
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "Cares Act") was enacted. The CARES Act changed net loss carryforward and back provisions and the business interest expenses limitation. The Company has evaluated the impact of the CARES Act and determined that none of the changes would result in a material cash benefit to the Company.