

	Years Ended January 31,
	2020			2019			2018
Current:
Federal	$	372		$	76		$	—
State	236			134			88
Foreign	2,028			1,442			1,493
Total	2,636			1,652			1,581
Deferred:
Federal	(2,534		)	(3,389		)	(96		)
State	(1,336		)	(704		)	6
Foreign	578			(877		)	(204		)
Total	(3,292		)	(4,970		)	(294		)
Provision for (benefit from) income taxes	$	(656	)	$	(3,318	)	$	1,287



	Years Ended January 31,
	2020			2019			2018
Income tax benefit at statutory rate	$	(36,997	)	$	(21,474	)	$	(27,958	)
State taxes, net of federal benefit	298			106			564
Impact of foreign income taxes	5,376			5,111			5,555
Stock based compensation	(41,800		)	(27,361		)	1,741
Non-deductible expenses	2,114			1,238			615
Change in valuation allowance	72,263			40,357			(11,791		)
Research and development credits	(1,899		)	(1,540		)	(1,146		)
Prior year true ups	59			135			(144		)
Change in tax rate due to the Tax Act	—			—			33,110
Other	(70		)	110			741
Provision for (benefit from) income taxes	$	(656	)	$	(3,318	)	$	1,287

The overall tax benefit recorded for the current fiscal year is driven by a net release in the Company's valuation allowance on deferred tax assets relative to the prior year, principally as a result of deferred taxes recorded in purchase accounting as part of the Realm acquisition and partially offset by the establishment of the valuation allowance on the net deferred tax assets in the U.K.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) significantly revised the U.S. corporate income tax law, by among other things, reducing the corporate income tax rate to 21% for tax years beginning in 2018, implementing a modified territorial system that includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries and creating new taxes on certain foreign sourced earnings. As of January 31, 2019, the Company completed its accounting for the income tax effects of the Tax Act, in accordance with the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 118.

Deferred income taxes arise from temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax reporting purposes, as well as operating losses and tax credit carryforwards.



	Years Ended January 31,
	2020			2019
Deferred tax assets:
Net operating loss carryforwards	$	204,193		$	121,024
Deferred revenue	31,103			2,663
Finance and operating lease liabilities	19,068			—
Other reserves	377			346
Gross deferred tax assets	254,741			124,033
Valuation allowance	(136,981		)	(101,502		)
Total deferred tax assets, net of valuation allowance	117,760			22,531
Deferred tax liabilities:
Goodwill	(55		)	(44		)
Depreciable assets	(10,796		)	(2,288		)
Finance and operating lease right-of-use assets	(12,681		)	—
Convertible senior notes	(78,812		)	(19,066		)
Other liabilities and accruals	(15,559		)	16
Total deferred tax liabilities	(117,903		)	(21,382		)
Net deferred tax assets (liabilities)	$	(143	)	$	1,149

Deferred tax assets are recognized when management believes it more likely than not that they will be realized. Deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The valuation allowance for deferred tax assets as of January 31, 2020 and 2019 was $137.0 million and $101.5 million, respectively. In assessing the realizability of deferred tax assets, management 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 future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and tax planning strategies in making this assessment.

As of January 31, 2020 the Company had net operating loss carryforwards for federal, state, Irish and U.K. income tax purposes of $659.7 million, $475.3 million, $258.8 million and $7.2 million, respectively, which begin to expire in the year ending January 31, 2028 for federal purposes and January 31, 2020 for state purposes. Ireland, U.K. and the U.S. federal losses for years after January 31, 2018 allows net operating losses to be carried forward indefinitely. The Company also has federal research credit carryforwards of $6.6 million, which begin to expire in the year ending January 31, 2029. Utilization of the federal net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state provisions. The annual limitation, should the Company undergo an ownership change, may result in the expiration of federal or state net operating losses and credits before utilization, however the Company does not expect any such limitation to be material.

The calculation of the Company’s tax obligations involves dealing with uncertainties in the application of complex tax laws and regulations. ASC 740, Income Taxes, provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. The Company has assessed its income tax positions and recorded tax benefits for all years subject to examination, based upon the Company’s evaluation of the facts, circumstances and information available at each period end. For those tax positions where the Company has determined there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

Although the Company believes that it has adequately reserved for its uncertain tax positions, the Company can provide no assurance that the final tax outcome of these matters will not be materially different. As the Company expands internationally, it will face increased complexity and the Company’s unrecognized tax benefits may increase in the future. The Company makes adjustments to its reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made.

The following table summarizes the changes in the Company’s unrecognized gross tax benefits during the periods presented (in thousands):



	Years Ended January 31,
	2020		2019			2018
Unrecognized tax benefits at beginning of year	$	4,603	$	4,049		$	4,400
Increase (decrease) in tax positions in prior years	53		(26		)	(1,494		)
Additions based on tax positions in the current year	634		580			1,143
Unrecognized tax benefits at end of year	$	5,290	$	4,603		$	4,049

The Company continues to evaluate whether to continue applying the exception to the presumption of the repatriation of foreign earnings applying the rules of the Tax Act and continues to be permanently reinvested outside of the United States. The Company has not provided for U.S. federal income and foreign withholding taxes on approximately $1.9 million of undistributed earnings from non-U.S. operations as of January 31, 2020 because the Company intends to reinvest such earnings indefinitely outside of the United States. If the Company were to distribute these earnings, foreign tax credits may become available under current law to reduce the resulting U.S. income tax liability. The Company has estimated the amount of unrecognized deferred tax liability related to these earnings to be approximately $0.2 million.

The Company is not currently under Internal Revenue Service, state, or foreign income tax examination. The Company does not anticipate any significant increases or decreases in its uncertain tax positions within the next twelve months. The Company files tax returns in the United States for federal and certain states. All tax years remain open to examination for both federal and state purposes as a result of the net operating loss and credit carryforwards. The Company files foreign tax returns in various locations. These foreign returns are open to examination for the fiscal years ending January 31, 2014 through January 31, 2019.