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Income Taxes
6 Months Ended
Jun. 30, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
7. 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.
 
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 carry back losses to 2014, the only year in which the Company had taxable income. The Company is currently projecting tax losses in 2017. The Company does not expect to realize its net deferred tax assets recorded as of December 31, 2016 in 2017. The Company expects to carry forward its 2015 and 2016 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. Due to 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. As of December 31, 2016, the Company has federal NOL carryforwards of approximately $187.4 million. These losses are due to expire in 2036.
 
For the three months and six months ended June 30, 2017, the Company recognized a de minimis amount of income tax provision (benefit) from income taxes. For the three and six months ended June 30, 2016, the Company recorded a benefit from income taxes of $0.3 million and $0.2 million, respectively. The provision and benefit from income taxes recorded in each period of 2017 and 2016 was based upon the Company’s estimated federal and state income tax liability for those respective years.

Pursuant to ASC 740, Income Taxes, the Company routinely evaluates the likelihood of success if challenged on income tax positions claimed on its income tax returns.  During the six months ended June 30, 2017, the Company amended certain state income tax returns to claim a refund for taxes previously paid.  These claims may result in refunds to the Company of up to approximately $8.4 million. As the Company believes that the likelihood of its position in claiming the refunds does not rise to the level of more likely than not at this time, the Company has not recorded a current tax receivable for the refund claims as of June 30, 2017.

The Company will continue to evaluate its ability to realize its deferred tax assets on a periodic basis and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant tax authorities, the progress of ongoing tax audits and the regulatory approval of products currently under development. Any additional changes to the valuation allowance recorded on deferred tax assets in the future would impact the Company’s income taxes.