(10) Income Taxes

Differences between the actual tax provision (benefit) and the tax provision (benefit) computed using the United States federal income tax rate is as follows for the years ended December 31, 2014, 2013 and 2012 (in thousands):

	Years ended December 31,
	2014			2013			2012
Benefit at statutory rate	$	(29,293	)	$	(30,665	)	$	(21,349	)
State taxes, net of federal benefit		(3,342	)		(3,735	)		(3,220	)
State net operating loss expiration		—			661			3,167
Stock-based compensation		1,094			1,118			382
Tax credits		(1,720	)		(2,462	)		(411	)
Foreign rate differential		6,243			5,252			—
Other		100			(47	)		22
Increase in valuation allowance		26,918			29,878			21,409

Income tax provision (benefit)	$	—		$	—		$	—

The effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at December 31, 2014 and 2013 are presented below (in thousands):

	2014			2013
Deferred tax assets:
Federal and state net operating loss carryforwards	$	194,091		$	170,557
Federal and state research and development credits		21,401			19,675
Depreciation and amortization		2,423			2,412
Deferred compensation		7,643			6,254
Other		1,427			1,169

Deferred tax assets		226,985			200,067
Less valuation allowance		(226,985	)		(200,067	)

Net deferred tax assets	$	—		$	—

The total valuation allowance increased by approximately $26.9 million, $29.9 million and $21.4 million in the years ended December 31, 2014, 2013 and 2012, respectively.

The Company has established valuation allowances against its deferred tax assets because management believes that, after considering all of the available objective evidence, both historical and prospective, the realization of the deferred tax assets does not meet the "more likely than not" criteria. The Company evaluates the need for a valuation allowance on a quarterly basis.

For tax years through 2014 the Company performed analyses to determine if there were changes in ownership, as defined by Section 382 of the Internal Revenue Code that would limit its ability to utilize certain net operating loss and tax credit carryforwards. The Company determined that it experienced an ownership change, as defined by Section 382, in connection with its acquisition of Principia Associates, Inc. on September 20, 2002, but did not experience a change in ownership upon the effectiveness of the Company's IPO, or any other equity offerings to date. As a result, the utilization of the Company's federal tax net operating loss carryforwards generated prior to the ownership change is limited. As of December 31, 2014, the Company has net operating loss carryforwards for U.S. federal tax purposes of approximately $529.7 million, after excluding net operating losses that have expired unused as a result of Section 382 limitations, with the remainder expiring in varying amounts through 2034 unless utilized. At December 31, 2014, the Company has state net operating loss carryforwards of approximately $275.4 million, which will expire through 2034 unless utilized. The net operating loss carryforwards include approximately $1.4 million of deductions related to the exercise of common stock options. This amount represents an excess tax benefit and has not been included in the gross deferred tax asset reflected for net operating losses. The utilization of these net operating loss carryforwards may be further limited if the Company experiences future ownership changes as defined in Section 382 of the Internal Revenue Code.

At December 31, 2014, the Company had approximately $16.7 million and $7.1 million, respectively, in federal and state research and development credits. Unless utilized, the federal credits will expire from 2020 through 2034, state research credits will expire from 2018 through 2029 and state investment tax credits will expire from 2015 through 2017.

The Company is currently open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions for the tax years ended 2011 through 2014. Carryforward tax attributes generated in years past may still be adjusted upon future examination if they have or will be used in a future period. The Company is currently not under examination by the Internal Revenue Service or any other jurisdictions for any tax years.

The Company does not consider any of its tax positions to be uncertain and accordingly there are no tax reserves for the years ended December 31, 2014, 2013 and 2012. The Company will recognize interest expense and penalties related to uncertain tax positions in income tax expense. The Company has not, as yet, conducted a study of its domestic research and development credit carryforwards. This study may result in an increase or decrease to the Company's research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company's research and development credits, and if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. As a result, there would be no impact to the consolidated balance sheet, statement of operations and comprehensive loss or cash flows if an adjustment were required.