9. Income Taxes

The Company utilizes the liability method of accounting for deferred income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. A valuation allowance is established against deferred tax assets when, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company's policy is to record interest and penalties on uncertain tax positions as income tax expense. As of December 31, 2015, the Company accrued approximately $0.3 million in interest and penalties related to the timing of certain tax payments for the 2014 tax year. As of December 31, 2014, the Company did not believe any material uncertain tax positions were present, and as such, the Company did not accrue any interest or penalties due to uncertain tax positions.

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A reconciliation of the statutory U.S. federal rate to the Company's effective tax rate is as follows:

	Years ended December 31,
	2015			2014			2013
Percent of pre-tax income:
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		7.4	%		6.8	%		—
Permanent items		(0.5	)%		2.3	%		(2.2	)%
Impact of state rate changes		0.9	%		—			—
Research and development credit		—			—			2.7	%
Change in valuation allowance		(29.1	)%		(89.5	)%		(35.5	)%

Effective income tax rate		13.7	%		(45.4	)%		0.0	%

The components of income tax (benefit) expense are as follows:

	Years ended December 31,
	2015			2014			2013
Current:
Federal	$	136		$	29,505		$	—
State		91			11,440			—
Deferred:
Federal		(17,014	)		(4,469	)		—
State		—			—			—

Income tax (benefit) expense	$	(16,787	)	$	36,476		$	—

Significant components of the Company's deferred tax assets (liabilities) for 2015 and 2014 consist of the following:

	As of December 31,
	2015			2014
Deferred tax assets (liabilities)
Deferred revenue	$	142,675		$	120,611
License and technology payments		13,150			14,251
Share-based compensation		11,427			5,679
Accrued expenses		743			442
Depreciation		(617	)		(328	)
Federal and state net operating loss carryforwards		26,065			—
Excess tax benefits related to share-based compensation		1,630			—
Charitable contribution carryforwards		5			—

Deferred income tax assets		195,078			140,655
Valuation allowance		(171,965	)		(136,138	)

Net deferred tax assets	$	23,113		$	4,517

In assessing the realizability of deferred tax assets, the Company 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 taxable income during the periods in which the temporary differences representing net future deductible amounts become deductible, and is impacted by the Company's ability to carryback losses to 2014, the only year in which the Company had taxable income. The Company incurred tax losses in 2015. As such, the Company has recorded a benefit from income taxes during the year ended December 31, 2015. The Company currently expects to realize its net deferred tax assets recorded as of December 31, 2015 due to the Company's ability to carryback its expected 2015 federal tax losses to 2014. The Company expects to carry forward its 2015 state tax losses due to various state restrictions on the use of carryback claims. The state NOLs are expected to begin to expire in 2027. Because of the Company's history of losses and lack of other positive evidence to support taxable income after the 2014 tax year, the Company has recorded a valuation allowance against those remaining deferred tax assets that are not expected to be realized.

Deferred tax assets relating to employee share-based compensation deductions were reduced to reflect exercises of non-qualified stock option grants and vesting of RSUs. Although certain of these deductions will be reported on the corporate tax returns and increase the Company's NOLs, these related tax benefits are not recognized for financial reporting purposes.