Income Taxes

For the year ended December 31, 2014, domestic loss before income taxes totaled $83,256, while foreign loss before income taxes totaled $2,463. For the year ended December 31, 2013, domestic loss before income taxes totaled $39,250, while foreign loss before income taxes totaled $1,658. For the year ended December 31, 2012, loss before income taxes was solely domestic. The Company recognized a current tax benefit of $103 in a foreign jurisdiction during the year ended December 31, 2014. There is no deferred income tax benefit recognized for the year ended December 31, 2014, nor current or deferred income tax benefits recognized for the years ended December 31, 2013 and 2012 due to the Company’s and its subsidiaries’ histories of net losses combined with an inability to confirm recovery of the tax benefits of the Company’s and its subsidiaries’ losses and other net deferred tax assets. Income tax benefit for the years ended December 31, 2014, 2013 and 2012 differed from amounts computed by applying the applicable U.S. federal corporate income tax rate of 34% to loss before income taxes as a result of the following:



	2014			2013			2012
Computed statutory income tax benefit	$	(29,144	)	$	(13,909	)	$	(27,837	)
Increase in income tax benefit resulting from State income tax benefit, net of federal income taxes	(3,544		)	(1,834		)	(3,711		)
Nondeductible stock based compensation	1,386			575			333
Contribution of services by shareholder	677			527			527
Gain in previously held equity investment	—			(2,477		)	—
Research and development tax credits	258			(1,203		)	—
Other, net	1,503			1,317			(238		)
	(28,864		)	(17,004		)	(30,926		)
Change in valuation allowance for deferred tax assets	28,761			17,004			30,926
Total income tax provision	$	(103	)	$	—		$	—

The tax effects of temporary differences that comprise the deferred tax assets and liabilities at December 31, 2014 and 2013, are as follows:



	2014		2013
Deferred tax assets
Allowance for doubtful accounts	$	783	$	—
Equity securities	4,694		415
Property, plant and equipment	79		—
Accrued liabilities and long-term debt	2,703		1,445
Stock-based compensation	8,283		1,677
Deferred revenue	43,774		28,456
Research and development tax credits	9,661		10,062
Net operating loss carryforwards	103,114		97,395
Total deferred tax assets	173,091		139,450
Less: Valuation allowance	161,660		131,985
Net deferred tax assets	11,431		7,465
Deferred tax liabilities
Property, plant and equipment	—		140
Intangible assets	11,431		7,325
Total deferred tax liabilities	11,431		7,465
Net deferred tax assets (liabilities)	$	—	$	—

Activity within the valuation allowance for deferred tax assets during the years ended December 31, 2014, 2013 and 2012 was as follows:



	2014		2013		2012
Valuation allowance at beginning of year	$	131,985	$	113,051	$	82,125
Increase in valuation allowance as a result of
Mergers and acquisitions, net	914		1,930		—
Current year operations	28,761		17,004		30,926
Valuation allowance at end of year	$	161,660	$	131,985	$	113,051

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Due to the Company and its subsidiaries’ histories of net losses incurred from inception, no income tax benefit has been recorded and the corresponding deferred tax assets have been fully reserved as the Company and its subsidiaries cannot sufficiently be assured that these deferred tax assets will be realized in accordance with the provisions of ASC 740. The components of the deferred tax assets and liabilities as of the date of the mergers and acquisitions by the Company prior to consideration of the valuation allowance are substantially similar to the components of deferred tax assets presented herein.

The American Taxpayer Relief Act of 2012, which retroactively reinstated the federal research and development tax credit for 2012, was not enacted into law until January 2013. Therefore, the deferred tax asset and corresponding increase in the valuation allowance for the amount of the tax credit generated in 2012 are reflected in 2013 for financial statement purposes.

The Company’s past issuances of stock and mergers and acquisitions have resulted in ownership changes as defined in Section 382 of the Internal Revenue Code of 1986. As a result, utilization of portions of the net operating losses may be subject to annual limitations. As of December 31, 2014, approximately $16,400 of the Company’s net operating losses generated prior to 2008 are limited by Section 382 to annual usage limits of approximately $1,500. As of December 31, 2014, approximately $19,100 of the Company’s net operating losses were inherited via acquisition and are limited based on the value of the target at the time of the transaction.

At December 31, 2014, the Company has loss carryforwards for federal income tax purposes of approximately $254,528 available to offset future taxable income and federal and state research and development tax credits of $6,770, prior to consideration of annual limitations that may be imposed under Section 382. These carryforwards will begin to expire in 2022. Of these loss carryforwards, $8,856 relate to benefits from stock compensation deductions that will be recorded as a component of paid-in capital when realized. The Company's direct foreign subsidiary has foreign loss carryforwards of approximately $11,800 that do not expire.

The Company does not record deferred taxes on the undistributed earnings of its direct foreign subsidiary because it does not expect the temporary differences related to those unremitted earnings to reverse in the foreseeable future. At December 31, 2014, the Company’s direct foreign subsidiary had accumulated earnings of approximately $196. Future distributions of accumulated earnings of the Company’s direct foreign subsidiary may be subject to U.S. income and foreign withholding taxes.

The Company does not file a consolidated income tax return with AquaBounty or BioPop. At December 31, 2014, AquaBounty has loss carryforwards for federal and foreign income tax purposes of approximately $12,500 and $4,600, respectively, available to offset future taxable income and foreign research and development tax credits of $2,600, prior to consideration of annual limitations that may be imposed under Section 382 or analogous foreign provisions. These carryforwards will begin to expire in 2018. As a result of the Company’s ownership in AquaBounty passing 50% in 2013, an annual Section 382 of approximately $900 per year will apply to losses and credits carried forward by AquaBounty from prior years, which are also subject to prior Section 382 limitations. At December 31, 2014, BioPop had an insignificant amount of loss carryforwards for federal income tax purposes available to offset future taxable income.

The Company and its subsidiaries apply provisions related to the accounting for uncertain income tax positions in ASC 740-10. The Company and its subsidiaries do not have material unrecognized tax benefits as of December 31, 2014. The Company does not anticipate significant changes in the amount of unrecognized tax benefits in the next 12 months. The Company’s tax returns for years 2004 and forward are subject to examination by federal or state tax authorities due to the carryforward of unutilized net operating losses and research and development tax credits.