There was no provision for income taxes for the years ended December 31, 2019 and 2018, due to the Company’s operating losses and a full valuation allowance on deferred tax assets. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	December 31,
	2019			2018
Deferred tax assets:
Net operating loss carry forwards	$	8,506,035		$	3,604,179
Capitalized research and development costs		17,477,585			14,381,936
Accrued liabilities		133,933			232,899
Tax credit carryforwards		7,174,516			6,311,164
Stock-based compensation		935,508			394,918
Operating lease		141,777			—
Total deferred tax assets		34,369,354			24,925,096

Valuation allowance		(34,221,451	)		(24,922,829	)
Net deferred tax assets		147,903			2,267

Deferred tax liabilities:
Operating lease right of use asset		(141,777	)		—
Other		(6,126	)		(2,267	)
Total deferred tax liabilities		(147,903	)		(2,267	)

	$	—		$	—

A reconciliation of the U.S. federal statutory tax rate to the effective tax rate is as follows:

	December 31,
	2019			2018
Federal statutory rate		21.0	%		21.0	%
R&D and Orphan Drug credits		4.4	%		10.9	%
State income tax, net of federal tax benefit		6.6	%		2.8	%
Valuation allowance		(31.6	%)		(35.2	%)
Share-based compensation		(0.2	%)		0.0	%
Other, net		(0.2	%)		0.5	%
Effective tax rate		0.0	%		0.0	%

Management currently believes that it is more likely than not that the deferred tax assets relating to the loss carryforwards and other temporary differences will not be realized in the future. Through December 31, 2019, for income tax reporting purposes, the Company had U.S. federal and state net operating loss carryforwards of approximately $36.1 million and research and development credits and Orphan Drug credits of approximately $7.1 million that can be carried forward and offset against taxable income. For state purposes, the Company had state net operating loss carryforwards of approximately $1.1 million and research and development credits of approximately $0.1 million that can be carried forward and offset against taxable income. Federal net operating loss, research and development credits, and Orphan Drug credits generated prior to 2018 and Massachusetts net operating losses can be carried forward for 20 years and begin to expire in 2022. Federal net operating loss generated after 2017 can be carried forward indefinitely. Utilization of net operating losses may be subject to substantial annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986, and similar state provisions. The annual limitations may result in the expiration of net operating losses before utilization.