Income Taxes

Loss before income taxes consisted of the following (in thousands):



	Year Ended December 31,
	2015			2014			2013
United States	$	(324,805	)	$	(269,426	)	$	(94,455	)
Foreign	(210,320		)	(211,018		)	(85,477		)
Total	$	(535,125	)	$	(480,444	)	$	(179,932	)

The provision for (benefit from) income taxes consisted of the following (in thousands):



	Year Ended December 31,
	2015			2014			2013
Federal:
Current	$	—		$	11		$	—
Deferred	—			(36,208		)	(56,212		)
State:
Current	(160		)	255			86
Deferred	—			(3,263		)	(4,564		)
Foreign:
Current	5,604			2,945			1,478
Deferred	(1,354		)	(394		)	(85		)
Total	$	4,090		$	(36,654	)	$	(59,297	)

Reconciliation of the federal statutory income tax rate to the effective tax rate is as follows:



	Year Ended December 31,
	2015		2014		2013
Federal statutory rate	35.0	%	35.0	%	35.0	%
Effect of:
State taxes, net of federal tax benefit	—		0.6		2.5
Change in valuation allowance	(21.0	)	(11.2	)	13.4
Research and development tax credit	1.1		1.2		0.8
Convertible preferred stock warrants	—		—		(1.3	)
Stock-based compensation	(1.1	)	(1.9	)	2.9
Foreign differential	(14.1	)	(15.6	)	(17.1	)
Non-deductible/non-taxable items	(0.6	)	(0.2	)	—
Other, net	(0.1	)	(0.3	)	(3.2	)
Total	(0.8	)%	7.6	%	33.0	%

The components of the deferred tax assets and liabilities are as follows (in thousands):



	As of December 31,
	2015			2014
Deferred tax assets:
Net operating loss carryforwards	$	82,201		$	67,451
Accruals and reserves	16,841			9,549
Stock-based compensation	59,872			45,843
Fixed assets	12,122			6,906
Deferred revenue	43,411			23,095
Research and development credits	23,445			14,959
Other deferred tax assets	1,017			802
Gross deferred tax assets	238,909			168,605
Valuation allowance	(81,937		)	(54,872		)
Total deferred tax assets	156,972			113,733
Deferred tax liabilities:
Acquisition related intangibles	(81,621		)	(112,928		)
Other deferred tax liabilities	(92		)	(326		)
Convertible senior notes	(73,427		)	—
Total deferred tax liabilities	(155,140		)	(113,254		)
Total net deferred tax assets	$	1,832		$	479

A valuation allowance is provided when it is more likely than not that the deferred tax asset will not be realized. Our valuation allowance increased by approximately $27.1 million during the year ended December 31, 2015, primarily as a result of additional deferred tax assets recorded during the year for stock-based compensation and net operating loss carryforwards.

As of December 31, 2015, we had federal and state net operating loss carry forwards of approximately $542.6 million and $675.2 million, respectively, available to reduce future taxable income, if any. If not utilized, the federal net operating loss carry forwards will expire from the years ending December 31, 2024 through 2035 while state net operating loss carry forwards will expire from the years ending December 31, 2016 through 2035.

We also have federal and state research and development tax credit carry forwards of approximately $16.2 million and $10.5 million, respectively. If not utilized, the federal credit carry forwards will expire in various amounts from the years ended December 31, 2024 through 2035. The state credit will carry forward indefinitely.

Utilization of the net operating loss carry forwards and credits may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization.

As a result of certain realization requirements of ASC 718, the table of deferred tax assets shown above does not include certain deferred tax assets as of December 31, 2015 that arose directly from tax deductions related to equity compensation greater than compensation recognized for financial reporting. Equity will be increased by $116.2 million if and when such deferred tax assets are ultimately realized. The Company uses ASC 740 ordering when determining when excess tax benefits have been realized.

As of December 31, 2015, we had $31.9 million of unrecognized tax benefits, of which $30.0 million would affect income tax expense if recognized, before consideration of our valuation allowance. As of December 31, 2015, our federal, state, and foreign returns for all years are still open to examination. We do not expect the unrecognized tax benefits to change significantly over the next 12 months. We recognize both interest and penalties associated with uncertain tax positions as a component of income tax expense. During the years ended December 31, 2015, 2014 and 2013, we recognized interest and penalties of $183,000, $115,000 and $71,000, respectively. As of December 31, 2015 and 2014, our total accrual for interest and penalties was $398,000 and $215,000, respectively. The ultimate amount and timing of any future cash settlements cannot be predicted with reasonable certainty.

A reconciliation of gross unrecognized tax benefit is as follows (in thousands):



	Year Ended December 31,
	2015		2014			2013
Unrecognized tax benefits at the beginning of the period	$	21,264	$	10,887		$	1,172
Additions for tax positions related to the current year	10,614		10,452			8,789
Increases related to prior year tax positions	24		—			947
Decreases related to prior year tax positions	—		(52		)	—
Decreases based on settlements with taxing authorities	—		—			(21		)
Lapse of statute of limitations	—		(23		)	—
Unrecognized tax benefits at the end of the period	$	31,902	$	21,264		$	10,887

As of December 31, 2015, we have not made any tax provision for U.S. federal and state income taxes on approximately $12.1 million of undistributed earnings in foreign subsidiaries, which we expect to reinvest outside of the U.S. indefinitely. If we were to repatriate these earnings to the U.S., we would be subject to U.S. income taxes and subject to an adjustment for foreign tax credits and foreign withholding taxes. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable.

The provision for income taxes for the year ended December 31, 2015 reflects an effective tax rate of (0.8)%. The tax expense is primarily due to foreign taxes.

The benefit from income taxes for the year ended December 31, 2014 reflects an effective rate of 7.6%. The tax benefit is primarily due to the portion of the increase in U.S. deferred tax assets primarily related to current year operating losses and stock-based compensation for which no U.S. valuation allowance is required. The valuation allowance is not required to the extent that deferred tax liabilities on acquisition-related intangibles are available as a source of income for the U.S deferred tax assets. The tax benefit was also partially due to the reduction in U.S. deferred tax liabilities previously established in purchase accounting, partially offset by foreign taxes and state minimum taxes.

The benefit from income taxes for the year ended December 31, 2013 reflects an effective rate of 33.0%. The tax benefit is primarily due to a reduction of the U.S. valuation allowance resulting from recording a deferred tax liability on the acquisition-related intangibles for which no benefit will be derived, partially offset by foreign taxes and state minimum taxes.