Income Tax

Our financial statements include a total income tax expense of $0 on net losses of $85.5 million, $2.2 million and $18.7 million for the years ended December 31, 2016, 2015 and 2014, respectively. A reconciliation of the difference between the provision for income taxes and income taxes at the statutory U.S. federal income tax rate is as follows for the years ended December 31:



	2016		2015		2014
Federal statutory rate	34.0	%	34.0	%	34.0	%
Effect of:
Change in valuation allowance	(36.5	)%	(28.0	)%	(35.7	)%
Federal effect of change in state and local tax valuation allowance	2.5	%	(6.0	)%	1.7	%
Income tax provision effective rate	—	%	—	%	—	%

The significant components of our deferred tax asset were as follows as of December 31 (in thousands):



	2016			2015
Deferred tax assets relating to:
Net operating loss carryforwards	$	25,880		$	19,183
Loan loss reserve	40,897			20,231
Imputed interest income	800			729
Deferred rent	2,670			1,613
Miscellaneous items	174			5
Total gross deferred tax assets	70,421			41,761
Deferred tax liabilities:
Internally developed software	2,224			1,756
Property, equipment and software	6,747			4,613
Origination costs	7,417			3,394
Miscellaneous items	430			20
Total gross deferred tax liabilities	16,818			9,783
Deferred assets less liabilities	53,603			31,978
Less: valuation allowance	(53,603		)	(31,978		)
Net deferred tax asset	$	—		$	—

In assessing the realizability of deferred tax assets, we consider 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 future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and planned tax strategies in making this assessment. Based upon the level of historical losses and projections for future taxable income over the periods in which the deferred tax assets are deductible, we believe it is more likely than not that we will not realize the benefits of these deductible differences in the future. Therefore, we have recorded a full valuation allowance on our net deferred tax asset.

Deductions that are not deemed more likely than not to withstand examination by a taxing authority are considered to be "uncertain tax positions" as defined in ASC 740 Income Taxes. Prior to January 1, 2016, we had not recognized any uncertain tax positions. During the year ended December 31, 2015, we claimed deductions on our U.S. federal tax return for certain expenses related to our initial public offering that were validated at the level of substantial authority, but did not exceed the "more likely than not" threshold. We estimate the tax-effected exposure of these deductions to be approximately $2.2 million. These deductions did not result in any change to our tax payable or our provision for income taxes, both of which were $0 as of and for the year ended December 31, 2016. These deductions will increase our deferred tax asset as well as the corresponding valuation allowance. There will be no financial statement benefit derived from this additional deferred tax asset until such time as the valuation allowance is released.

Our net operating loss carryforwards for federal income tax purposes were approximately $69.7 million, $50.6 million and $57.2 million at December 31, 2016, 2015 and 2014, respectively, and, if not utilized, will expire at various dates beginning in 2029. State net operating loss carryforwards were $68.9 million, $49.8 million and $56.4 million at December 31, 2016, 2015 and 2014, respectively. Net operating loss carryforwards and tax credit carryforwards reflected above may be limited due to historical and future ownership changes.