14. INCOME TAXES

The components of the provision for income taxes for the year ended December 31, 2019, 2018 and 2017, are as follows (in thousands):


	Year Ended December 31,
	2019		2018		2017
Current:
State	$	2	$	4	$	5
Foreign		301		—		1,204
Total current		303		4		1,209
Deferred:
Federal		—		—		(30)
Total deferred		—		—		(30)
Provision for income taxes	$	303	$	4	$	1,179

The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate:


	Year Ended December 31,
	2019		2018		2017
Change in valuation allowance	(21.9)	%	(22.5)	%	19.9	%
Income tax at the federal statutory rate	21.0		21.0		35.0
State taxes, net of federal benefit	0.3		0.6		0.5
Net impact related to foreign subsidiary	—		—		(1.2)
Impact of tax reform rate change	—		—		(56.4)
Tax credits	1.6		1.4		1.0
Stock based compensation	(0.9)		(1.2)		(0.8)
Other	(0.4)		0.7		0.1
Income tax provision	(0.3)	%	—	%	(1.9)	%

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows as of December 31, 2019 and 2018:


	December 31,
	2019		2018
	(in thousands)
Deferred tax assets:
Amortization and depreciation	$	45,555	$	38,376
Net operating loss carryforwards		40,896		31,621
Tax credits		10,136		8,200
Stock-based compensation		4,853		3,763
Lease obligation		984		—
Other		940		888
Gross deferred tax assets		103,364		82,848
Valuation allowance		(102,344)		(81,645)
Deferred tax assets net of valuation allowance		1,020		1,203
Deferred tax liabilities
Right of use asset		(834)		—
Revenue recognition		(158)		(1,054)
Other		(28)		(149)
Net deferred tax assets	$	—	$	—

Realization of deferred tax assets is dependent on future taxable income, if any, the timing and the amount of which are uncertain. The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant component of objective negative evidence evaluated was the Company’s cumulative loss incurred over the three-year period ended December 31, 2019. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of December 31, 2019, December 31, 2018 and December 31, 2017, a full valuation allowance has been recorded against Company’s net deferred tax asset. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.

As of December 31, 2019, the Company had net operating loss carryforwards for federal income tax purposes of approximately $232.1 million, of which approximately $91.4 million can be carried forward indefinitely and the remaining net operating losses expire beginning in 2030, if not utilized. Federal research and development tax credit carryforwards of approximately $11.4 million that expire beginning in 2027, if not utilized, and foreign tax credit carryforwards of approximately $1.2 million that expire in 2027, if not utilized.

In addition, the Company had net operating loss carryforwards for California income tax purposes of approximately $88.3 million that expire beginning of 2030, if not utilized, and state research and development tax credit carryforwards of approximately $7.8 million which can be carried forward indefinitely. The Company had approximately $0.1 million of minimum tax credit carryovers for California income tax purposes. The minimum tax credits have no expiration date. The Company had other state net operating losses of approximately $1.8 million that begin to expire in 2025.

The future utilization of net operating loss and tax credit carryforwards and credits may be subject to an annual limitation, pursuant to Internal Revenue Code Sections 382 and 383, as a result of ownership changes that may have occurred previously or that could occur in the future. Due to the existence of the valuation allowance, limitations under Section 382 and 383 will not impact the Company’s effective tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	December 31,
	2019		2018		2017
	(in thousands)
Balance at beginning of year	$	23,052	$	20,734	$	3,892
Additions based on tax positions related to prior year		755		1,634		16,103
Additions based on tax positions related to current year		731		684		739
Balance at end of year	$	24,538	$	23,052	$	20,734

The unrecognized tax benefits, if recognized and in absence of full valuation allowance, would impact the income tax provision by $13.2 million, $9.8 million, and $8.6 million as of December 31, 2019, 2018, and 2017, respectively.

The Company has elected to include interest and penalties as a component of tax expense. During the years ended December 31, 2019, 2018 and 2017, the Company did not recognize accrued interest and penalties related to unrecognized tax benefits. Although the timing and outcome of an income tax audit is highly uncertain, the Company does not anticipate that the amount of existing unrecognized tax benefits will significantly change during the next 12 months.

The Company files a federal income tax return in the U.S. and state income tax returns in California, Georgia, Maryland, Massachusetts, Michigan, New Hampshire, Oregon and Wisconsin. Because carryforward attributes generated in past years may be adjusted in a future period, the income tax returns remain open to U.S. federal and California state tax examinations. The Company is not currently under examination in any tax jurisdiction.