

	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Domestic	$	116,676	$	92,153	$	52,806
Foreign	—		—		—
Income before income taxes	$	116,676	$	92,153	$	52,806



	Year Ended December 31,
	2019		2018			2017
	(in thousands)
U.S. federal taxes:
Current	$	1,716	$	—		$	—
Deferred	15,944		14,243			(71,839		)
Total U.S. federal taxes	17,660		14,243			(71,839		)
State taxes:
Current	3,900		2,676			388
Deferred	935		(176		)	(4,865		)
Total state taxes	4,835		2,500			(4,477		)
Total	$	22,495	$	16,743		$	(76,316	)

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 our deferred tax assets are as follows:



	Year Ended December 31,
	2019			2018
Deferred tax assets:	(in thousands)
Federal and state net operating losses	$	7,391		$	23,551
Capitalized research and patent costs	7,317			10,260
Research credits	26,164			24,771
Stock-based compensation costs	12,026			9,124
Operating lease liability	857			—
Other	4,186			6,137
Total deferred tax assets	57,941			73,843
Valuation allowance	(11,410		)	(11,184		)
Deferred tax liabilities
Operating lease right-of-use asset	(854		)	—
Total deferred tax liabilities	(854		)	—
Net deferred tax assets	$	45,677		$	62,659

Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Each quarter, we assess our ability to use our deferred tax assets to offset our expected federal and state taxable income based on the weight of all available evidence, including such factors as the history of recent earnings and expected future taxable income on a jurisdiction by jurisdiction basis.

In the fourth quarter of 2017, we determined that it was more likely than not that we would generate sufficient taxable income to utilize our federal and state deferred tax assets in every state except California. We therefore included in our balance sheet the net value of all our deferred tax assets except those applicable to California. We maintain a full valuation allowance in relation to California deferred tax assets as of December 31, 2019 because of the uncertainty regarding the realizability of these deferred tax assets. All tax years from Corcept’s inception remain open to examination by the Internal Revenue Service, the California Franchise Tax Board and other state taxing authorities.

The valuation allowance increased by $0.2 million for the year ended December 31, 2019, and decreased by $1.3 million and $116.9 million for the years ended December 31, 2018 and 2017, respectively. The significant decrease in the valuation allowance during 2017 was the result of our release of the entire valuation allowance previously established on our federal and non-California state deferred tax assets.

At December 31, 2019, we had net operating loss carryforwards available to offset any future taxable income that we may generate for federal income tax purposes of $7.7 million, which will begin to expire in the year 2033, California net operating loss carryforwards of $75.2 million, which will begin to expire in the year 2029, and net operating loss carryforwards from other states of $9.7 million, which will begin to expire in the year 2023 if not utilized.

At December 31, 2019, we also had federal research and development tax credits of $10.4 million and orphan drug tax credits of $14.6 million, respectively and California research and development credits of $7.5 million. The federal tax credits will begin to expire in the years 2030 through 2039 and the California research credits have no expiration date.

Utilization of our net operating losses and tax credit carryforwards may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such limitations could result in the expiration of the net operating losses and tax credit carryforwards before utilization.



	Year Ended December 31,
	2019			2018			2017
	(in thousands)
U.S. federal taxes at statutory rate	$	24,502		$	19,354		$	17,954
Changes in valuation allowance	—			—			(119,765		)
Federal tax rate change impact to change in valuation allowance	—			—			33,233
R&D and other credits	(4,504		)	(2,178		)	(1,199		)
State income taxes	3,819			1,975			(2,955		)
Non-deductible compensation	657			394			33
Stock-based compensation	(2,107		)	(3,165		)	(3,826		)
Other	128			363			209
Total	$	22,495		$	16,743		$	(76,316	)

We maintain liabilities for uncertain tax positions. The measurement of these liabilities involves considerable judgment and estimation and are continuously monitored by management based on the best information available, including changes in tax regulations, the outcome of relevant court cases, and other pertinent information.



	Year Ended December 31,
	2019		2018			2017
Beginning Balance	$	4,756	$	4,139		$	3,527
Increase in tax positions for prior years	261		—			150
Decrease in tax positions for prior years	—		(135		)	—
Increase in tax positions for current year	1,012		752			462
Decrease in tax positions for current year	—		—			—
Ending Balance	$	6,029	$	4,756		$	4,139

As of December 31, 2019, 2018 and 2017, the total amount of unrecognized tax benefits was approximately $6.0 million, $4.8 million and $4.1 million, respectively. A valuation allowance is maintained on the tax benefits related to California deferred tax assets and if these tax benefits were recognized it would not impact the effective tax rate. We had no or immaterial amounts of accrued interest and no accrued penalties related to unrecognized tax benefits as of December 31, 2019, 2018 and 2017. We do not expect our unrecognized tax benefits to change materially over the next 12 months.

While we believe we have adequately provided for all tax positions, amounts asserted by tax authorities could be greater or less than the recorded position. Accordingly, our provisions on federal and state tax-related matters to be recorded in the future may change as revised estimates are made or the underlying matters are settled or otherwise resolved.