12. Income Taxes

No provision for U.S. income taxes has been made due to cumulative losses since the commencement of operations.

A provision for income taxes of $0.5 million, $0.2 million and $26,000 has been recognized for the years ended December 31, 2011, 2010 and 2009, respectively, related primarily to our subsidiaries located outside of the United States. Our net loss before provision for income taxes for the years ended December 31, 2011, 2010 and 2009 were as follows (in thousands):


	Year Ended December 31,
	2011			2010			2009
Domestic	$	254,761		$	154,734		$	56,983
International		(839	)		(579	)		(1,269	)

Loss before income taxes	$	253,922		$	154,155		$	55,714

The components of the provision for income taxes for the years ended December 31, 2011, 2010 and 2009, consisted of the following (in thousands):


	Year Ended December 31,
	2011		2010			2009
Current:
Federal	$	—	$	—		$	—
State		29		9			4
Foreign		437		177			(53	)

Total current		466		186			(49	)

Deferred:
Federal		—		—			—
State		—		—			—
Foreign		23		(13	)		75

Total deferred		23		(13	)		75

Total provision for income taxes	$	489	$	173		$	26

Deferred tax assets (liabilities) as of December 31, 2011 and 2010 consisted of the following (in thousands):


	December 31, 2011			December 31, 2010
Deferred tax assets:
Net operating loss carry-forwards	$	218,811		$	140,642
Research and development credits		18,501			13,344
Deferred revenue		526			160
Inventory and warranty reserves		3,537			2,609
Depreciation and amortization		3,071			1,125
Accruals and others		3,970			2,940

Total deferred tax assets		248,416			160,820
Valuation allowance		(248,384	)		(160,803	)

Deferred tax liabilities:
Undistributed earnings of foreign subsidiaries		—			—
Depreciation and amortization		(37	)		—

Net deferred tax assets (liabilities)	$	(5	)	$	17

Reconciliation of statutory federal income taxes to our effective taxes for the years ended December 31, 2011, 2010 and 2009 is as follows (in thousands):


	Year Ended December 31,
	2011			2010			2009
Tax at statutory federal rate	$	(86,333	)	$	(52,413	)	$	(18,943	)
State tax—net of federal benefit		(8,118	)		(5,842	)		(2,825	)
Nondeductible expenses		10,742			9,310			514
Foreign income rate differential		(56	)		254			(72	)
U.S. tax credits		(5,049	)		(4,406	)		(2,498	)
Other reconciling items		1,589			736			4,809
Change in valuation allowance		87,714			52,534			19,041

Provision for income taxes	$	489		$	173		$	26

Management believes that based on the available information, it is more likely than not that the deferred tax assets will not be realized, such that a full valuation allowance is required against all U.S. deferred tax assets.

As of December 31, 2011, we had approximately $605 million of federal and $352 million of California operating loss carry-forwards available to offset future taxable income, $21 million of which is associated with windfall tax benefits that will be recorded as additional paid-in capital when realized. These carryforwards will expire in varying amounts beginning in 2024 for federal and 2019 for state if unused. Additionally, we have research and development tax credits of approximately $10.9 million and $11.5 million for federal and state income tax purposes, respectively. If not utilized, the federal carry-forwards will expire in various amounts beginning in 2019. However, the state credits can be carried forward indefinitely.

We have indefinitely reinvested $2.2 million of undistributed earnings of our foreign operations outside of our U.S. tax jurisdiction as of December 31, 2011. No deferred tax liability has been recognized for the remittance of such earnings to the U.S. since it is our intention to utilize these earnings to fund future foreign expansions including but not limited to, hiring of additional personnel, capital purchases, expansion into larger facilities, and potential new dealerships.

Federal and state laws can impose substantial restrictions on the utilization of net operating loss and tax credit carry-forwards in the event of an "ownership change," as defined in Section 382 of the Internal Revenue Code. Prior to our IPO, we performed a study and had determined that no significant limitation would be placed on the utilization of our net operating loss and tax credit carry-forwards as a result of prior ownership changes. We do not believe that our public offerings and private placements constituted an ownership change resulting in limitations on our ability to use our net operating loss and tax credit carry-forwards; however, we have not yet performed a study subsequent to our IPO to determine whether such limitations exist.

Uncertain Tax Positions

Effective January 1, 2007, we adopted new accounting guidance related to the recognition, measurement and presentation of uncertain tax positions. As a result, we recorded net unrecognized tax benefits of $11.5 million with an offset to the deferred tax assets with a full valuation allowance.

The aggregate changes in the balance of our gross unrecognized tax benefits during the years ended December 31, 2011, 2010 and 2009 were as follows (in thousands):


January 1, 2009	$	15,055
Increases in balances related to tax positions taken during current year		541

December 31, 2009		15,596
Increases in balances related to tax positions taken during current year		797

December 31, 2010		16,393
Increases in balances related to tax positions taken during current year		1,037

December 31, 2011	$	17,430

Accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense and was $5,000. As of December 31, 2011, unrecognized tax benefits of $17.4 million, if recognized, would not affect our effective tax rate as the tax benefits would increase a deferred tax asset which is currently fully offset with a full valuation allowance. We do not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. We file income tax returns in the United States, California, various states, the United Kingdom and other foreign jurisdictions. Tax years 2008 to 2011 remain subject to examination for federal purposes, and tax years 2007 to 2011 remain subject to examination for California purposes. All net operating losses and tax credits generated to date are subject to adjustment for U.S. federal and California purposes. Tax years 2006 to 2011 remain open for examination in other U.S. state and foreign jurisdictions.