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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Taxes |
Income Taxes | 10. Income Taxes During the year end December 31, 2020, the Company’s Israeli operations were dissolved and as a result, the Company wrote off all existing deferred tax assets related to the Israeli operations which consisted primarily of net operating loss carryforwards. The write off of the deferred tax assets was offset by an equal reduction in the valuation allowance. As of December 31, 2020, the Company had federal and state net operating loss carryforwards of approximately $160,531 and $141,751, respectively, which begin to expire in 2030 for federal and state purposes. The Company’s federal net operating losses include $79,223 which can be also carried forward indefinitely. The Company may be able to utilize its net operating loss carryforwards to reduce future federal and State income tax liabilities. However, these net operating losses are subject to various limitations under Internal Revenue Code (“IRC”) section 382, which limit the use of net operating loss carryforwards to the extent there has been an ownership change of more than 50 percentage points. In addition, the net operating loss carryforwards are subject to examination by taxing authorities and could be adjusted or disallowed due to such exams. Although the Company has not undergone an IRC section 382 analysis, it is possible that the utilization of the Company’s net operating loss carryforwards may be limited. In addition, the Company has federal and state research and development tax credits of approximately $3,770 and $645, respectively, that begin to expire in 2030 for federal and state tax purposes. There is no provision for income taxes in the United States or Israel, because the Company has historically incurred operating losses and maintains a full valuation allowance against its deferred tax assets in these jurisdictions. The deferred tax asset recorded in the consolidated balance sheet relates to our Australian operations. Income (loss) before income taxes consisted of the following:
|  | Year Ended
|  | December 31,
|  | 2020 |  | 2019
U.S. |  | $ | (28,699) |  | $ | (32,875)
Foreign |  |  | 1,183 |  |  | (28)
Loss before income taxes |  | $ | (27,516) |  | $ | (32,903)
A summary of the Company’s current and deferred expense for income tax is as follows:
|  | Year Ended
|  | December 31,
|  | 2020 |  | 2019
Current expense (benefit): |  |  |  |  |  |
Federal |  | $ | — |  | $ | —
State |  |  | — |  |  | —
Foreign |  |  | 40 |  |  | —
Total current expense (benefit): |  | $ | 40 |  | $ | —
Deferred expense (benefit): |  |  |  |  |  |
Federal |  | $ | — |  | $ | —
State |  |  | — |  |  | —
Foreign |  |  | (42) |  |  | (3)
Total deferred expense (benefit): |  | $ | (42) |  | $ | (3)
Total income tax expense (benefit): |  | $ | (2) |  | $ | (3)
A reconciliation of the Company’s statutory income tax rate to the Company’s effective income tax rate is as follows:
|  | Year Ended |
|  | December 31, |
|  | 2020 |  | 2019 |
Income at US Statutory Rate |  | 21.00 | % | 21.00 | %
State Taxes, net of Federal benefit |  | 6.97 | % | 6.79 | %
Permanent Differences |  | (1.09) | % | (0.33) | %
Tax Credits |  | 5.98 | % | 3.30 | %
Tax Law Change |  | (0.04) | % | 0.00 | %
Foreign Rate Differential |  | (0.46) | % | 0.07 | %
Israel DTA write-off |  | (70.15) | % | 0.00 | %
Valuation Allowance |  | 36.56 | % | (40.18) | %
Other |  | 1.23 | % | 9.35 | %
|  | 0.00 | % | 0.00 | %
The significant components of the Company’s deferred tax assets as of December 31, 2020 and 2019 were as follows:
|  | Year Ended
|  | December 31,
|  | 2020 |  | 2019
Accrued expenses |  |  | 455 |  |  | 277
License Fees |  |  | 1,168 |  |  | 1,332
Stock Options |  |  | 3,759 |  |  | 2,584
Other |  |  | 228 |  |  | 115
State net operating loss carryforwards |  |  | 8,959 |  |  | 7,431
State research tax credits |  |  | 625 |  |  | 510
Federal net operating loss carryforwards |  |  | 33,711 |  |  | 47,845
Federal research tax credits |  |  | 4,943 |  |  | 3,770
Total deferred tax assets |  |  | 53,848 |  |  | 63,864
Valuation allowance |  |  | (53,669) |  |  | (63,737)
Net deferred tax asset (liability) |  |  | 179 |  |  | 127
As of December 31, 2020 and 2019, the Company had provided a full valuation allowance against its net deferred tax assets, except for its Australian deferred tax assets, because realization of any future tax benefit cannot be reasonably assured. The valuation allowance increased during the year ended December 31, 2019 by $13,220 and decreased during the year ended December 31, 2020 by $10,068. The decrease for the year ended December 31, 2020 is primarily attributed to the write-off of the Israel net operating loss carryforwards. The Company follows the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Company to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals of litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon the ultimate settlement with the relevant taxing authority. As of December 31, 2020 the Company has not recorded any uncertain tax positions. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The earliest tax years that may be subject to examination by jurisdiction are 2016 for both federal and state purposes. The Company’s policy is to record interest and penalties related to income taxes as part of the tax provision. There were no interest and penalties pertaining to uncertain tax positions for the years ended December 31, 2020 or 2019.

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