INCOME TAXES

The reconciliation between federal income taxes at the statutory U.S. federal income tax rate and the Company’s income tax expense for the year is as follows:



(in thousands)	December 31, 2019			December 31, 2018
Tax benefit at statutory rate	$	(23,591	)	$	(20,608	)
Other	(294		)	128
Stock based compensation	2,674			2,213
Issuance costs on warrants, private placement option, and preferred stock	4,657			—
Deferred tax valuation allowances	19,542			21,606
Research and development credit	(2,988		)	(3,339		)
Income tax expense	$	—		$	—

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for income tax purposes. Significant components of the Company’s deferred taxes as of December 31, 2019 and 2018 are as follows:



(in thousands)	December 31, 2019			December 31, 2018
Deferred tax assets (liabilities):
Federal net operating loss carryforward	$	81,960		$	63,624
Stock compensation	3,270			4,533
Intangible assets	8,077			8,392
Research and development credit	16,601			13,612
Operating lease right-of-use assets	(1,229		)	—
Lease liabilities	1,538			—
Other	2,336			2,858
Total deferred tax assets, net of deferred tax liabilities	112,553			93,019
Valuation allowance	(112,553		)	(93,019		)
Net deferred tax assets	$	—		$	—

Net operating loss carryforwards and research tax credits as of December 31, 2019 and 2018 are as follows:



(in thousands)	December 31, 2019		December 31, 2018
U.S. federal income tax net operating loss carryforwards	$	390,286	$	302,971
U.K. net operating loss carryforwards	$	—	$	2,424
U.S. federal research tax credits	$	11,348	$	8,939
Texas research tax credits	$	5,252	$	4,673

The Company has $169.0 million of U.S. federal net operating loss carryovers that have no expiration date and the remaining begin to expire in 2025. The U.S. Federal and state research credits will begin to expire in 2028 and 2034 respectively. No study has been performed on the research and development (R&D) credits and gross R&D credits in the amount of $16.6 million could be limited based on review by the Internal Revenue Service.

The Internal Revenue Code Section 382 limits NOL and tax credit carry forwards when an ownership change of more than 50% of the value of the stock in a loss corporation occurs. Accordingly, the ability to utilize remaining NOL and tax credit carryforwards may be significantly restricted.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during periods in which those temporary differences become deductible.

Due to the uncertainty surrounding the realization of the benefits of its deferred assets, including NOL carryforwards, the Company has provided a 100% valuation allowance on its deferred tax assets at December 31, 2019 and 2018. The changes in the valuation allowance was an increase of $19.5 million and an increase of $21.6 million for the years ended December 31, 2019 and 2018, respectively.