12. Income Taxes

The components of the income tax expense/ (benefit) for the years ended December 31, 2015, 2014, and 2013 were as follow, in thousands:

	Year Ended December 31,
	2015		2014		2013
Current
Federal	$	914	$	—	$	—
State		42		—		—
Deferred
Federal		—		—		—
State		—		—		—

Total	$	956	$	—	$	—

For the years ended December 31, 2015, the expense (benefit) for US. Federal or state income taxes was $1.0 million. For the years ended December 31, 2014, and 2013, there was no expense (benefit) for U.S. Federal or state income taxes based on continuing operations, net operating loss carryforwards and the Company's valuation allowance against its deferred income tax asset. A reconciliation of the expected income tax expense/(benefit) computed using the U.S. Federal statutory income tax rate to the Company's effective income tax rate is as follows, in thousands:

	Year Ended December 31,
	2015			2014			2013
Income tax expense/(benefit) computed at U.S. Federal statutory tax rate	$	5,240		$	6,955		$	(32,286	)
Permanent items		601			610			340
State income taxes		50			627			(4,772	)
Change in valuation allowance		(4,849	)		(10,604	)		31,526
Uncertain income tax position		833			(960	)		5,411
Research and development credits		(979	)		(535	)		(156	)
Other		60			(125	)		(63	)
Deferred rate change		—			4,032			—

Income tax expense (benefit)	$	956		$	—		$	—

The Company recorded a change in our deferred income tax rate due to changes in state apportionment factors. The deferred income tax expense/(benefit) have been entirely offset by the net change in valuation allowances. The significant components of the Company's deferred income tax assets (liabilities) were as follow, in thousands:

	As of December 31,
	2015			2014
Deferred tax assets:
Net operating loss carryforward	$	34,676		$	42,800
Deferred rent credit		532			506
Accrued compensation and non-qualified stock options		5,891			3,392
Deferred financing costs		188			244
Depreciation and amortization		291			474
Research and development credits		5,529			4,725
Capitalized overhead into inventory (UNICAP §263A)		543			675
Other		495			552
Valuation allowance		(47,526	)		(49,914	)

Net deferred tax asset		619			3,454
Deferred tax liability:
Debt discount on convertible notes		(509	)		(3,454	)
Depreciation		(110	)		—

Net deferred taxes	$	—		$	—

In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some or all of the deferred income tax assets will not be realized. The ultimate realization of the deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the net operating loss (NOL) and tax credit carryforwards are available. Management considers projected future taxable income, the scheduled reversal of deferred income tax liabilities, and available tax planning strategies that can be implemented by the Company in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the NOL and credit carryforwards are available to reduce income taxes payable, management has established a full valuation allowance as the Company is not more likely than not to realize such net deferred tax assets.

The net decrease during the year ended December 31, 2015 in total valuation allowance of approximately $2.5 million is due to the pretax book income which was generated in the current year and an adjustment in the Company's deferred income tax rate.

As of December 31, 2015, the US Federal and state NOL carryforwards amounted to approximately $91.8 million ($34.6 million tax effected) and will expire in various years beginning in 2030. As of December 31, 2015, the Company has available research and development credit carryforwards of approximately $5.5 million, which expire, if unused, starting in 2026. The use of the Company's U.S. Federal and state NOL carryforwards and research and development credits are restricted in annual use due to changes in the Company's ownership. For the year ended December 31, 2015, the Company utilized NOL's of approximately $18.5 million and expects the remaining $91.8 million of NOL carryforwards to become available over the years from 2016 to 2020, in amounts ranging from $7.8 million to $20.3 million per year. In addition, the Company has available research and development credits of approximately $5.5 million expected to become available in 2020 to 2021. The Company's state NOL's will have a similar limitation to the amount noted for US Federal. Additionally, despite the NOL carryforwards, the Company may have a future tax liability due to state and local income tax requirements. The Company paid no Federal income taxes in the years ended December 31, 2015, 2014, or 2013.

The Company accounts for uncertain income tax positions pursuant to the guidance in FASB ASC Topic 740, Income Taxes. The Company recognizes interest and penalties related to uncertain tax positions, if any, in income tax expense. As of December 31, 2015, the Company accrued interest of a nominal amount and penalties of $0.1 million related to uncertain tax positions. The Company's income taxes have not been subject to examination by any tax jurisdictions since its inception in 2005. Due to NOL and research and development credit carryforwards, all U.S. Federal and state income tax returns filed by the Company are subject to examination by the taxing jurisdictions. Any uncertain income tax position liability has been recorded to the Company's deferred income tax assets to offset such tax attribute carryforwards.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows, in thousands:

	Year Ended December 31,
	2015			2014			2013
Balance as of January 1	$	8,342		$	9,828		$	688
Gross (decreases) increases related to prior-year tax positions		(5	)		(1,040	)		23
Gross increases related to current-year tax positions		984			80			9,117
Gross decreases related to current-year tax positions		(244	)		—			—
Change in tax rates		(21	)		(526	)		—

Balance as of December 31	$	9,056		$	8,342		$	9,828

The Company believes that most of its uncertain income tax positions would not result in adjustments to its effective income tax rate because a corresponding adjustments to deferred income tax assets would be offset by adjustments to recorded valuation allowances. As of December 31, 2015, the Company recorded $1.0 million of current tax expense on setting up an uncertain tax position related to the Alternative Minimum Tax. The Company does not anticipate a significant increase or decrease in the uncertain income tax benefits within the next 12 months.