
	Year Ended December 31,
(in thousands)	2020		2019		2018
Current
Federal	$	—	$	287	$	(21)
State	3,158		(13,166)		3,424
International	170		114		(135)
	3,328		(12,765)		3,268
Deferred
Federal	(1,506)		8,712		7,821
State	(178)		790		1,411
International	350		223		(3,470)
	(1,334)		9,725		5,762
Income tax expense (benefit)	$	1,994	$	(3,040)	$	9,030


	Year Ended December 31,
(in thousands)	2020		2019		2018
U.S. statutory rate	$	(2,411)	$	6,012	$	10,405
Permanent items	1,406		3,210		152
Acquisition costs - Progenics	2,723		—		—
Recognition of deferred tax asset - assets held for sale	(3,000)		—		—
Section 162(m)	717		527		353
Uncertain tax positions	2,818		(13,156)		3,227
Other tax credits	(1,065)		(1,685)		(742)
State and local taxes	1,457		1,914		2,125


Foreign tax rate differential	(254)		(238)		30
Valuation allowance	(318)		(22)		(4,073)
Benefit of windfall related to stock compensation	(128)		(2,768)		(1,760)
Change in indemnification deferred tax asset	(590)		2,531		(731)
Other	639		635		44
Income tax expense (benefit)	$	1,994	$	(3,040)	$	9,030


	December 31,
(in thousands)	2020		2019
Deferred Tax Assets
Federal benefit of state tax liabilities	$	5,867	$	5,278
Reserves, accruals and other	32,030		15,026
Inventory obsolescence	404		550
Capitalized research and development	2,553		5,086
Amortization of intangibles other than goodwill	1,325		1,569
Net operating loss carryforwards	127,369		47,095
Depreciation	1,014		56
Deferred tax assets	170,562		74,660
Deferred Tax Liabilities
Reserves, accruals and other	(5,676)		(881)
Intangible assets	(91,283)		(707)

Deferred tax liability	(96,959)		(1,588)
Less: valuation allowance	(3,456)		(1,238)
	$	70,147	$	71,834
Recorded in the accompanying consolidated balance sheets as:
Noncurrent deferred tax assets, net	$	70,147	$	71,834

On June 19, 2020, the Company completed the Progenics Acquisition in a transaction that is expected to qualify as a tax-deferred reorganization under Section 368 of the Internal Revenue Code. The transaction resulted in an ownership change of Progenics under Section 382 of the Internal Revenue Code, and a limitation on the utilization of Progenics’ precombination tax attributes. All of Progenics’ precombination research credits and Orphan drug credits have been removed from the balance sheet, and the gross carrying value of the tax loss carryforwards reduced to their realizable value on the opening balance sheet, in accordance with the Section 382 limitation. Deferred tax liabilities of $92.3 million on acquired identified intangibles were recorded at acquisition resulting in a small net overall deferred tax liability for Progenics after the application of acquisition accounting. The Company also acquired estimated utilizable U.S. federal loss carryforwards of $338.7 million, tax-effected state loss carryforwards of $12.5 million and state tax credits of $2.5 million as a result of the Progenics acquisition. The utilization of these losses and credits is subject to annual limitations based on Sections 382 and 383 of the Internal Revenue Code.

The Company regularly assesses its ability to realize its deferred tax assets. Assessing the realizability of deferred tax assets requires significant management judgment. In determining whether its deferred tax assets are more-likely-than-not realizable, the Company evaluated all available positive and negative evidence, and weighed the objective evidence and expected impact. During the fourth quarter of fiscal year 2018, the Company's Canada subsidiary entered an accumulated three year period of profitability, removing a strong item of negative evidence previously supporting the recording of a full valuation allowance. Management determined that the weight of the relevant positive evidence outweigh the negative evidence, and released the valuation allowance against its Canada subsidiary's net deferred tax assets, resulting in an income tax benefit of $4.0 million in fiscal 2018. The Company continues to record valuation allowances of $1.2 million against the net deferred tax assets of its U.K. subsidiary, $2.1 million against the net deferred tax assets of its Sweden subsidiary, and $0.1 million against certain domestic state tax credits and state loss carryforwards.

The Company will continue to assess the level of the valuation allowance required. If the weight of negative evidence exists in future periods to again support the recording of a partial or full valuation allowance against the Company’s deferred tax assets, there would likely be a material negative impact on the Company’s results of operations in that future period.


(in thousands)	Amount
Balance, January 1, 2019	$	1,240
Charged to income tax (benefit) expense	(22)

Foreign currency	20

Release valuation allowance	—
Balance, December 31, 2019	1,238
Charged to income tax (benefit) expense	311

Foreign currency	31
Increase due to Progenics acquisition	2,479
Release valuation allowance	(603)
Balance, December 31, 2020	$	3,456

The Company’s U.S. federal income tax returns are subject to examination for three years after the filing date of the return. The state and foreign income tax returns are subject to examination for periods varying from three to four years after filing, depending on the specific jurisdictions’ statutes of limitation, and in the case of Sweden, up to six years after the end of the financial year.

At December 31, 2020, the Company has U.S. federal net operating loss carryovers of approximately $492.5 million,$354.5 million of which will expire between 2021 and 2037, and $138.0 million of which can be carried forward indefinitely. The Company’s state net operating losses are $18.0 million on a tax-effected basis, which will expire between 2021 and 2040. The Company also has U.S. federal research credits carryforwards of $2.4 million which will begin to expire in 2037. The Company has state research credit carryforwards of $4.2 million, which will expire between 2021 and 2035. The Company has state investment tax credit carryforwards of $2.6 million net of federal impact, $0.7 million of which have no expiration date, $1.8 million of which will expire between 2021 and 2023, and the remainder of which will fully expire by 2034.


(in thousands)	Amount
Balance of uncertain tax positions as of January 1, 2019	$	9,788
Additions related to current year tax positions	—
Reductions related to prior year tax positions	(4,496)
Settlements	—
Lapse of statute of limitations	—
Balance of uncertain tax positions as of December 31, 2019	5,292
Additions related to current year tax positions	—
Reductions related to prior year tax positions	—
Settlements	—
Lapse of statute of limitations	—
Balance of uncertain tax positions as of December 31, 2020	$	5,292

In connection with the Company’s acquisition of the medical imaging business from Bristol-Myers Squibb (“BMS”) in 2008, the Company recorded a liability for uncertain tax positions related to the acquired business and simultaneously entered into a tax indemnification agreement with BMS under which BMS agreed to indemnify the Company for any payments made to settle those uncertain tax positions with the taxing authorities. Accordingly, a long-term receivable is recorded to account for the expected value to the Company of future indemnification payments, net of actual tax benefits received, to be paid on behalf of the Company by BMS. The tax indemnification receivable is recorded within other long-term assets.

In accordance with the Company’s accounting policy, the change in the tax liability, penalties and interest associated with these obligations (net of any offsetting federal or state benefit) is recognized within income tax expense. As these reserves change, adjustments are included in income tax expense while the offsetting adjustment is included in other income. Assuming that the receivable from BMS continues to be considered recoverable by the Company, there will be no effect on net income and no net cash outflows related to these liabilities.

As of December 31, 2020 and 2019, total liabilities for uncertain tax positions including interest and penalties were $29.9 million and $27.0 million, respectively, consisting of uncertain tax positions of $5.3 million, interest accruals of $23.5 million and $20.7 million, respectively, and penalty accruals of $1.0 million. As of December 31, 2020 and 2019, these liabilities were included in other long-term liabilities. Included in the 2020, 2019 and 2018 tax provisions are an expense of $2.8 million, a benefit of $13.2 million and an expense of $3.2 million, respectively, relating to accrual of interest, net of benefits for reversals of uncertain tax positions recognized upon settlements, effective settlements, or lapses of relevant statutes of limitation.

The total long-term asset related to the indemnification was $20.8 million and $18.9 million at December 31, 2020 and 2019, respectively. Included in other (income) loss for the years ended December 31, 2020, 2019 and 2018, is tax indemnification expense (income), net of $(2.2) million, $10.6 million and $(2.9) million, respectively.

The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, was passed by the Congress and signed into law on March 27, 2020. The Company has reviewed the relevant measures of the Act. No material impacts of the Cares Act have been identified nor are any anticipated. On December 27, 2020, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 was signed into law, modifying certain aspects of the CARES Act. This Act contains numerous provisions some of which may be beneficial to the Company. The Company is analyzing those impacts but has not yet concluded its analysis.