14. Income Taxes

Loss before income taxes for the years ended December 31 consisted of the following:


	2014			2013			2012
	(In thousands)
Domestic	$	(50,455	)	$	(28,746	)	$	(17,618	)
Foreign		417			(535	)		(90	)

Loss before income taxes	$	(50,038	)	$	(29,281	)	$	(17,708	)

Income tax expense (benefit) differed from the amounts computed by applying the statutory federal income tax rate of 34% to pretax loss as a result of the following for the years ended December 31:


	2014			2013			2012
	(In thousands)
Income tax provision at statutory rate	$	(17,013	)	$	(9,955	)	$	(6,021	)
Nondeductible items		456			(32	)		349
Change in tax credits		(678	)		(893	)		39
Change in valuation allowance		17,911			10,965			5,894
Other		(676	)		(85	)		(261	)

	$	—		$	—		$	—

Net operating loss (“NOL”) carryforwards created by excess tax benefits from the exercise of non-qualified stock options are not recorded as deferred income tax assets. To the extent such NOL carryforwards are utilized, the benefit realized will increase stockholders’ equity. At December 31, 2014, for income tax return purposes the Company has gross federal and state NOL carryforwards totaling $136.6 million and tax credit carryforwards of $2.3 million. These carryforwards may be subject to limitations under the Internal Revenue Code and applicable state tax law. If not utilized, a portion of the carryforwards will begin to expire in 2023 through 2033.

The Company does not expect to utilize any of its net operating loss and tax credit carryforwards in the near term. The Company may have already experienced one or more ownership changes. Depending on the timing of any future utilization of its carryforwards, the Company may be limited as to the amount that can be utilized each year as a result of such previous ownership changes. However, the Company does not believe such limitations will cause its carryforwards to expire unutilized. Future changes in the Company’s stock ownership as well as other changes that may be outside the Company’s control could potentially result in further limitations on the Company’s ability to utilize its net operating loss and tax credit carryforwards.

The effect of temporary differences and carryforwards that give rise to deferred tax assets for the years ended December 31 were as follows:


	2014			2013
	(In thousands)
Net operating loss carryforwards	$	47,444		$	31,989
Research and development tax credit carryforwards		2,332			1,654
Other		4,147			2,369

Total deferred tax assets		53,923			36,012
Less: Valuation allowance		(53,923	)		(36,012	)

Net deferred tax assets	$	—		$	—

The Company has recorded a full valuation allowance related to its deferred tax assets due to the uncertainty of the ultimate realization of the future benefits from those assets.

The table below summarizes changes in the deferred tax asset valuation allowance:


	Balance at Beginning of Year		Changed to Costs and Expenses		Write-offs		Balance at End of Year
	(In thousands)
Deferred tax valuation allowance:
For year ended December 31, 2012	$	19,153	$	5,894	$	—	$	25,047
For year ended December 31, 2013		25,047		10,965		—		36,012
For year ended December 31, 2014		36,012		17,911		—		53,923

The total balance of unrecognized gross tax benefits for the years ended December 31, resulting from R&D credits claimed on the Company’s annual tax return was as follows:


	2014		2013		2012
	(In thousands)
Unrecognized tax benefits at beginning of year	$	551	$	253	$	267
Additions (reductions) based on current year tax positions		226		298		(14	)

Unrecognized tax benefits at end of year	$	777	$	551	$	253

The Company classifies applicable interest and penalties on amounts due to tax authorities as a component of the provision for income taxes. The amount of accrued interest and penalties recorded in 2014, 2013 or 2012 was not material. The Company does not anticipate that the amount of its existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. Due to the presence of net operating loss carryforwards in most jurisdictions, the Company’s tax years remain open for examination by U.S. taxing authorities back to 2004.