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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Tax Cuts and Jobs Act (“the Act”) was enacted on December 22, 2017. The income tax effects of changes in tax laws are recognized in the period when enacted. The Act provides for significant tax law changes and modifications with varying effective dates, which include reducing the U.S. federal corporate income tax rate from 35% to 21%, creating a territorial tax system (with a one-time mandatory repatriation tax on previously deferred foreign earnings), and allowing for immediate capital expensing of certain qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023. In response to the enactment of the Act in late 2017, the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address situations where the accounting is incomplete for certain income tax effects of the Tax Act upon issuance of an entity’s financial statements for the reporting period in which the Tax Act was enacted. Under SAB 118, a company may record provisional amounts during a measurement period for specific income tax effects of the Tax Act for which the accounting is incomplete but a reasonable estimate can be determined, and when unable to determine a reasonable estimate for any income tax effects, report provisional amounts in the first reporting period in which a reasonable estimate can be determined. While the Company was able to make reasonable estimates of the impact of the tax effects of the Tax Act, the final impact of the Tax Act may differ from those estimates, including, but not limited to changes in our interpretations and assumptions, additional guidance that may be issued by the IRS, return to provision differences and state rate adjustments. As guidance and technical corrections are issued in the upcoming quarters, the Company will record updates to its original provisional estimates. The Company remeasured certain U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The provisional amount recorded related to the remeasurement of the deferred tax balance was tax expense of $30 million which was offset by a reduction in the valuation allowance resulting in no tax expense. The provision (benefit) for income taxes is based on loss from operations before provision for income taxes and noncontrolling interests as follows ($ in thousands):
| Years Ended December 31,
| 2017 |  | 2016
United States | $ | (27,698 | ) |  | $ | (31,258 | )
| $ | (27,698 | ) |  | $ | (31,258 | )
The provision (benefit) for income taxes was as follows ($ in thousands):
|  | Years Ended December 31,
|  | 2017 |  | 2016
Current |  |  |
| U.S. Federal | $ | (9,310 | ) |  | $ | — |
| State and local | (1,641 | ) |  | — |
|  | $ | (10,951 | ) |  | $ | — |
Deferred |  |  |
| U.S. Federal | $ | (576 | ) |  | $ | — |
| State and local | — |  |  | — |
|  | $ | (576 | ) |  | $ | — |
Total |  |  |
| U.S. Federal | $ | (9,886 | ) |  | $ | — |
| State and local | (1,641 | ) |  | — |
|  | $ | (11,527 | ) |  | $ | — |
The provision (benefit) for income taxes is determined by applying the U.S. Federal statutory rate of 34% to income before income taxes as a result of the following ($ in thousands):
|  | Years Ended December 31,
|  | 2017 |  | 2016
U.S. Federal benefit at statutory rate |  | $ | (9,417 | ) |  | $ | (10,628 | )
State and local (benefit) / expense net of U.S. federal tax |  | (1,641 | ) |  | 2,759 |
Permanent non deductible expenses for U.S. taxes |  | 107 |  |  | 80 |
AMT credit benefit |  | (576 | ) |  | — |
True-up of prior year net operating loss |  | — |  |  | (2,371 | )
Effect of change in deferred tax rate |  | 29,809 |  |  | (44 | )
Valuation allowance for deferred tax assets |  | (29,809 | ) |  | 10,204 |
Tax provision benefit |  | $ | (11,527 | ) |  | $ | — |
Deferred income taxes at December 31, 2017 and 2016 consist of the following ($ in thousands):
|  | December 31,
|  | 2017 |  | 2016
Deferred Tax Assets: |  |  |  |
Accumulated net operating losses (tax effected) |  | $ | 60,171 |  |  | $ | 79,131 |
CIRM funding |  | 1,780 |  |  | — |
Deferred rent |  | 3 |  |  | 314 |
Share-based compensation |  | 2,656 |  |  | 11,562 |
Intangibles |  | 270 |  |  | 429 |
Charitable contributions |  | 11 |  |  | 424 |
Partnership interest |  | — |  |  | 3,858 |
Capital loss carry-forward |  | — |  |  | 6,988 |
Accumulated depreciation |  | 22 |  |  | — |
Accrued payroll |  | 682 |  |  | — |
AMT credit |  | 575 |  |  | — |
Other |  | 526 |  |  | 659 |
Deferred tax assets |  | 66,696 |  |  | 103,365 |
Deferred Tax Liabilities: |  |  |  |
Accumulated depreciation |  | $ | — |  |  | $ | (119 | )
Deferred tax liabilities |  | — |  |  | (119 | )
|  | 66,696 |  |  | 103,246 |
Valuation allowance |  | (66,121 | ) |  | (103,246 | )
Net deferred tax asset |  | $ | 575 |  |  | $ | — |
In assessing the realizability of deferred tax assets, including the net operating loss carryforwards (NOLs), the Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize its existing deferred tax assets. Based on its assessment, the Company has provided a full valuation allowance against its net deferred tax assets as their future utilization remains uncertain at this time. As of December 31, 2017 and 2016, the Company had approximately $210.3 million and $232.7 million, respectively of Federal NOLs available to offset future taxable income expiring from 2030 through 2036. In accordance with Section 382 of the Internal Revenue code, the usage of the Company’s NOLs could be limited in the event of a change in ownership. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period when those temporary differences become deductible. The Company performed an analysis and determined that they have had ownership change of greater than 50% over a 3 year testing period. The last ownership change was determined to be in 2015. Based on a market capitalization of $124.5M and using an applicable federal rate of 2.5% the annual limitation would be approximately $3.0 million. Post change losses from June 3, 2015 through December 31, 2016 would not be subject to 382 limitations. Additionally the Company would be able to further increase NOL limitations by the realized built in gain on the sale of PCT in May of 2017. The Company applies the FASB’s provisions for uncertain tax positions. The Company utilizes the two-step process to determine the amount of recognized tax benefit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties associated with certain tax positions as a component of income tax expense. As of December 31, 2017, management does not believe the Company has any material uncertain tax positions that would require it to measure and reflect the potential lack of sustainability of a position on audit in its financial statements. The Company will continue to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its financial statements is necessary. The Company does not believe there will be any material changes in its unrecognized tax positions over the next year. The Company completed the audit of its federal tax returns for the years 2012 and 2013 during the fourth quarter of 2016. The audit resulted in an adjustment to the Company’s NOL carryforward. For years prior to 2014 the federal statute of limitations is closed for assessing tax. The Company’s state tax returns remain open to examination for a period of three to four years from date of filing. The Company ceased doing business in China in 2012. After 2012, the Company had no foreign tax filing obligations. The foreign returns filed for 2012 and prior are subject to examination for five years.

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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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