Income (loss) before income taxes included the following components for the years ended December 31 (in thousands):

Significant components of the provision for income taxes are as follows for the years ended December 31 (in thousands):

A reconciliation of our effective income tax rate to the federal statutory rate follows for the years ended December 31 (in thousands):

(1)	Permanent differences include certain expenses that are not deductible for tax purposes including meals and entertainment, certain transaction costs, lobbying fees, and taxable income as a result of global intangible low-tax income ("GILTI").

Significant components of our deferred income tax assets and liabilities are as follows at December 31 (in thousands):


	2020		2019
Deferred income tax assets:
Net operating loss carryforward	$	1,834	$	2,341
Deferred revenue		21,055		15,348
Deferred compensation		1,175		971
Lease liability		5,730		2,460
Inventory reserve		511		1,258
Stock-based compensation		18,890		10,769
Amortization		2,436		1,133
Research and development tax credit carryforward		6,654		4,957
Reserves, accruals, and other		7,274		3,394
Total deferred income tax assets		65,559		42,631
Deferred income tax liabilities:
Contract asset		(1,150)		(883)
Right of use asset		(5,237)		(2,228)
Depreciation		(5,363)		(3,715)
Amortization		—		(62)
Investment in unconsolidated affiliate		(321)		—
Prepaid expenses		(874)		(600)
Other		(185)		(637)
Total deferred income tax liabilities		(13,130)		(8,125)
Net deferred income tax assets before valuation allowance		52,429		34,506
Valuation allowance		(7,308)		(7,172)
Net deferred income tax assets	$	45,121	$	27,334

We have $0.5 million of state net operating losses (“NOLs”) which expire at various dates between 2029 and 2036. We also have a federal NOL of $0.1 million which expires in 2036, and is subject to limitation under Internal Revenue Code (“IRC”) Section 382. We have $0.1 million of federal R&D credits, which expire between 2034 and 2037, and are also subject to limitation under IRC Section 382. We have $11.6 million of Arizona R&D credits carrying forward, which expire at various dates between 2021 and 2035. In the U.K., Canada, and Australia, we have $6.0 million, $1.0 million, and $1.3 million of NOLs, respectively, which expire at various dates or may be carried forward indefinitely.

In preparing our consolidated financial statements, we have assessed the likelihood that deferred income tax assets will be realized from future taxable income. In evaluating the ability to recover deferred income tax assets, we consider all available evidence, positive and negative, including our operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction by jurisdiction basis. A valuation allowance is established if it is determined that it is more likely than not that some portion or all of the net deferred income tax assets will not be realized. We exercise significant judgment in determining our provision for income taxes, our deferred income tax assets and liabilities, and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred income tax assets.

As of December 31, 2020, we continue to demonstrate cumulative positive income in the U.S. federal and state tax jurisdictions; however, we have Arizona R&D tax credits expiring unutilized each year. Therefore, we have concluded that it is more likely than not that our Arizona R&D deferred tax asset will not be realized.

As of December 31, 2020, we now have cumulative pre-tax income in the U.K. and Canada, along with positive evidence from projections of future growth for both entities. Therefore, we have released the full valuation allowances of $1.3 million and $0.3 million, respectively.

In Australia, we have determined that sufficient deferred tax liabilities will reverse in order to realize all assets except one long-lived intangible where there is not an expectation that the asset will be realized. Therefore, we have recorded a partial valuation allowance for Australia.

We consider the undistributed earnings of certain non-U.S. subsidiaries to be indefinitely reinvested outside of the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings. We project that our foreign earnings will be utilized offshore for working capital and future foreign growth. The determination of the unrecognized deferred tax liability on those undistributed earnings is not practicable due to our legal entity structure and the complexity of U.S. and local country tax laws. If we decide to repatriate the undistributed foreign earnings, we will need to recognize the income tax effects in the period we change our assertion on indefinite reinvestment.

We complete R&D tax credit studies for each year that an R&D tax credit is claimed for federal, Arizona, and California income tax purposes. Management has made the determination that it is more likely than not that the full benefit of the R&D tax credit will not be sustained on examination and recorded a liability for unrecognized tax benefits of $7.7 million as of December 31, 2020. Should the unrecognized tax benefit of $7.7 million be recognized, our effective tax rate would be favorably impacted.

The following table presents a roll forward of our liability for unrecognized tax benefits, exclusive of accrued interest, as of December 31 (in thousands):


	2020		2019		2018
Balance, beginning of period	$	6,861	$	6,058	$	4,243
Increase (decrease) in previous year tax positions		(34)		(615)		213
Increase in current year tax positions		950		1,749		1,982
Decrease due to lapse of statutes of limitations		(120)		(331)		(380)
Balance, end of period	$	7,657	$	6,861	$	6,058

Federal income tax returns for 2017 through 2019 remain open to examination by the U.S. Internal Revenue Service (the “IRS”), while state and local income tax returns for 2016 through 2019 also generally remain open to examination by state taxing authorities. The 2006 through 2015 income tax returns are only open to the extent that net operating loss or other tax attributes carrying forward from those years were utilized in 2016 through 2019. The foreign tax returns for 2016 through 2019 also generally remain open to examination. During 2020, we completed an audit of our 2016 U.S. federal income tax return by the Internal Revenue Service and began an audit of our 2016 and 2017 California income tax returns for which we are currently in the closing phase with the Franchise Tax Board. Additionally, we have been notified that an audit will commence for Axon Public Safety Southeast Asia LLC, our entity in Vietnam. The tax period has not yet been defined.

We recognize interest and penalties related to unrecognized tax benefits within the provision (benefit) for income tax expense line in the accompanying consolidated statements of operations and comprehensive income (loss). As of December 31, 2020 and 2019, we had accrued interest of $0.2 million and $0.2 million, respectively.