Income Taxes

The provision for income taxes is based on net loss before income taxes as follows:



	DECEMBER 31,
(in thousands)	2018			2017			2016
Net loss before income taxes:
United States	$	(203,230	)	$	(133,113	)	$	(88,123	)
Other	(29,336		)	(13,750		)	(10,743		)
Net loss before income taxes	$	(232,566	)	$	(146,863	)	$	(98,866	)

The components of the provision for income taxes are as follows:
	DECEMBER 31,
(in thousands, except percentages)	2018			2017			2016
Provision for income taxes:
Current:
United States	$	3		$	(24	)	$	193
Other	—			—			—
Total	$	3		$	(24	)	$	193
Deferred:
United States	$	—		$	(1,734	)	$	—
Other	—			—			—
Total	—			(1,734		)	—
Provision for income taxes	$	3		$	(1,758	)	$	193
Effective tax rate	—		%	1.20		%	(0.19		)%

Significant components of the Company’s net deferred income tax assets as of December 31, 2018 and 2017 consist of the following:



	DECEMBER 31,
(in thousands)	2018			2017
Net deferred tax assets:
Net operating loss carryforwards	$	112,375		$	58,172
Stock-based compensation	17,734			13,681
U.S. tax credit carryforwards	5,996			4,182
Envisia asset acquisition	5,888			7,107
Other assets	2,857			591
Other liabilities	(1,535		)	(349		)
Valuation allowance	(143,315		)	(83,384		)
Total net deferred income taxes	$	—		$	—

A reconciliation of the statutory tax rates and the effective tax rates for the years ended December 31, 2018, 2017 and 2016 is as follows:



	DECEMBER 31,
	2018		2017		2016
U.S. federal tax rate	21.00	%	35.00	%	35.00	%
Impact of federal tax legislation	—	%	25.82	%	—	%
State income taxes, net of federal benefit	4.56	%	7.71	%	5.34	%
Non-taxable foreign loss	0.09	%	(0.51	)%	(2.69	)%
Stock-based compensation	1.97	%	(0.02	)%	(1.46	)%
Other	(1.13	)%	(2.19	)%	(0.18	)%
Change in valuation allowance	(26.49	)%	(64.61	)%	(36.20	)%
Effective tax rate	—	%	1.20	%	(0.19	)%

In December 2017, the Tax Act was signed into law and enacted significant changes to the Internal Revenue Code of 1986, as amended. This tax legislation, among other changes, reduced the federal corporate income tax rate from 35% to 21% effective January 1, 2018. Under U.S. GAAP, deferred tax assets and liabilities are required to be revalued during the period in which the new tax legislation is enacted. Therefore, the deferred tax assets and liabilities were remeasured as of December 31, 2017, resulting in a reduction of the deferred tax asset balance and corresponding valuation allowance of $34.2 million due to the enacted changes in tax rate. The Tax Act also repealed the corporate AMT for tax years beginning after December 31, 2017, and provides that existing AMT credit carryovers are refundable in tax years beginning after December 31, 2017. The Company has approximately $1.7 million of AMT credit carryovers that are expected to be fully refunded between 2019 and 2022, of which $0.3 million is recorded as a current receivable with the remainder recorded as a non-current receivable within other assets on the consolidated balance sheet as of December 31, 2018. The Company reduced the valuation allowance on its deferred tax assets by $1.7 million and recognized an income tax benefit of the same amount during the year ended December 31, 2017 related to these federal AMT credit carryforwards.

At December 31, 2018, the Company had federal and state NOL carryforwards of approximately $387.7 million and $411.2 million, respectively. If not utilized, federal NOLs that arose prior to 2018 and state NOLs will begin to expire at various dates beginning in 2031 and 2024, respectively. Federal NOLs that arose on or after January 1, 2018 can be carried forward indefinitely against future income, but can only be used to offset a maximum of 80% of the Company’s federal taxable income in any year. As of December 31, 2018, the Company also had foreign NOL carryforwards of $44.1 million, which are available solely to offset taxable income of its foreign subsidiaries, subject to any applicable limitations under foreign law.

Federal NOLs and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities.

Realization of future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. The Company provides a valuation allowance when it is more likely than not that deferred tax assets will not be realized. Due to the Company’s history of operating losses and lack of available evidence supporting future taxable income, the Company maintains a valuation allowance on all of its deferred tax assets as of December 31, 2018. The increase in valuation allowance as of December 31, 2018 as compared to December 31, 2017 was primarily the result of the increase in NOL carryforwards.

The Company files income tax returns in the United States, Ireland and Malta. The federal and state income tax returns are open under the statute of limitations subject to tax examinations for the tax years ended December 31, 2014 through December 31, 2018. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the IRS or state tax authorities to the extent utilized in a future period.