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

Significant components of the provision (benefit) 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)	Other permanent differences include certain expenses that are not deductible for tax purposes including meals and entertainment, 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):


	2021		2020
Deferred income tax assets:
Net operating loss carryforward	$	68,353	$	1,834
Deferred revenue		27,031		21,055
Deferred compensation		1,414		1,175
Lease liability		5,886		5,730
Inventory reserve		684		511
Stock-based compensation		10,913		18,890
Amortization		2,672		2,436
Research and development tax credit carryforward		29,249		6,654
Reserves, accruals, and other		14,717		7,274
Total deferred income tax assets		160,919		65,559
Deferred income tax liabilities:
Contract asset		(1,104)		(1,150)
Right of use asset		(5,008)		(5,237)
Depreciation		(8,938)		(5,363)
Strategic investments		(2,653)		(321)
Prepaid expenses		(594)		(874)
Other		(72)		(185)
Total deferred income tax liabilities		(18,369)		(13,130)
Net deferred income tax assets before valuation allowance		142,550		52,429
Valuation allowance		(16,168)		(7,308)
Net deferred income tax assets	$	126,382	$	45,121

We have a federal net operating loss (“NOL”) of $259.0 million which will carry forward indefinitely. We also have a federal NOL of $0.1 million that will expire in 2036, which is subject to limitation under Internal Revenue Code (“IRC”) Section 382. Additionally, we have $251.4 million of state NOLs which will expire at various dates between 2026 and 2041 or carry forward indefinitely. We have $27.6 million of federal R&D credits, which expire between 2034 and 2041, and $0.1 million of which is subject to limitation under IRC Section 382. We have $19.1 million of state R&D credits carrying forward, which expire at various dates between 2022 and 2036, or carry forward indefinitely. In the U.K., Canada, and Finland, we have $1.5 million, $0.3 million, and $0.2 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, 2021, management continues to believe the positive evidence from projected future earnings outweighs the negative evidence and a valuation allowance is not needed. We have concluded that a valuation allowance is necessary against an unrealized loss on an investment in marketable securities as well as transaction costs incurred in connection with certain investments. Additionally, we do have Arizona R&D tax credits expiring unutilized each year; therefore, management has concluded that it is more likely than not that our Arizona R&D deferred tax asset will not be realized, and a valuation allowance has been recorded against this net asset.

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 may be realized. Therefore, we continue to have 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 and we have not made a provision for U.S. or additional foreign withholding taxes of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. We have determined the amount of deferred tax liability related to investments in these foreign subsidiaries is immaterial. If we decide to repatriate the undistributed foreign earnings, we will 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 and state 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 $18.2 million as of December 31, 2021. Should the unrecognized tax benefit of $18.2 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):


	2021		2020		2019
Balance, beginning of period	$	7,657	$	6,861	$	6,058
Increase (decrease) in previous year tax positions		22		(34)		(615)
Increase in current year tax positions		11,416		950		1,749
Decrease due to lapse of statutes of limitations		(846)		(120)		(331)
Balance, end of period	$	18,249	$	7,657	$	6,861

Federal income tax returns for 2018 through 2020 remain open to examination by the U.S. Internal Revenue Service (the “IRS”), while state and local income tax returns for 2017 through 2020 also generally remain open to examination by state taxing authorities. The 2007 through 2016 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 2017 through 2020. The foreign tax returns for 2017 through 2020 also generally remain open to examination. During 2021, we started and completed an audit of our 2018 Illinois income tax return. 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, 2021, and 2020, we had accrued interest of $0.2 million and $0.2 million, respectively.