13. Income Taxes

The Company's loss before provision for income taxes during the years ended December 31, 2019 and 2018, was a domestic loss of $38,529,436 and $32,146,057, respectively.

The effective tax rate for 2019 and 2018 was 0%. As a result of the Company's history of net operating losses and a full valuation allowance against its deferred tax assets, there was no current or deferred income tax provision for the year ended December 31, 2019.

The components of the provision for income taxes during the years ended December 31, 2019 and 2018 is as follows:


	December 31,		December 31,
	2019		2018
Current:
Federal	$	10,000	$	—
State		—		—
Foreign		—		—
Total current		10,000		—
Deferred:
Federal		—		—
State		—		—
Foreign		—		—
Total deferred		—		—
Total provision for income taxes	$	10,000	$	—

The Company’s effective tax during the years ended December 31, 2019 and 2018, differed from the federal statutory rate as follows:


	December 31,		December 31,
	2019		2018
Statutory rate	(21.0)	%	(21.0)	%
State taxes	(0.1)	%	(5.6)	%
Tax credits	—	%	(0.2)	%
Goodwill and indefinite-lived intangible asset impairment	—	%	3.4	%
Book loss on debt extinguishment	5.4	%	—	%
Other	0.5	%	1.0	%
Effect of U.S. tax law change	—	%	—	%
Valuation allowance	15.2	%	22.4	%
Effective tax rate	—	%	—	%

Net deferred tax assets as of December 31, 2019 and 2018 consist of the following:


	December 31,		December 31,
	2019		2018
Non-current deferred tax assets:
Net operating losses	$	15,966,084	$	12,156,279
Tax credits		241,425		329,563
Stock compensation		1,363,578		1,479,325
Other		—		573,441
		17,571,087		14,538,608
Valuation allowance		(13,884,133)		(8,512,820)
Net non-current deferred tax assets		3,686,954		6,025,788
Non-current deferred tax liabilities:
Other		(20,594)		—
Property and equipment		(3,666,360)		(6,025,788)
Net non-current deferred tax liability		(3,686,954)		(6,025,788)
Net non-current deferred tax asset (liability)	$	—	$	—

A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized. The Company has established a valuation allowance to offset net deferred tax assets as of December 31, 2019 and 2018, due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets.

The valuation allowance increased by $5,371,313 during the year ended December 31, 2019.

As of December 31, 2019, the Company had federal and California net operating loss carryovers of approximately $68,143,400 and $23,705,790, respectively. Of the federal net operating losses, $20,741,993 will begin to expire in 2034 and $47,401,407 will carryforward indefinitely. The California net operating losses will begin to expire in 2033.

As of December 31, 2019, the Company had California research credit carryovers of approximately $382,003. The California research credits carry forward indefinitely. The Company had no Federal research credit carryovers.

Utilization of the domestic NOL and tax credit forwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by the Internal Revenue Code Section 382, as well as similar state provisions. In general, an "ownership change," as defined by the code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders or public groups. Any limitation may result in expiration of all or a portion of the NOL or tax credit carryforwards before utilization. As of December 31, 2018, the Company has reduced its federal and California gross net operating loss by $99,989,021 and $44,557,023 respectively. The Company also reduced its federal and California R&D credit carryforwards by $1,415,339 and $696,670, respectively.

Uncertain Tax Positions

The Company has adopted the provisions of ASC 740, “Income Taxes Related to Uncertain Tax Positions.” Under these principals, tax positions are evaluated in a two-step process. The Company first determines whether it is more-likely-than-not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to be recognized in the financial statements. The tax position is measured as the largest amount of benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement.

The following is a reconciliation of the beginning and ending amount of our total gross unrecognized tax benefit liabilities:


	December 31,		December 31,
	2019		2018
Gross Unrecognized Tax Benefit--Beginning Balance	$	100,889	$	97,010
Increases Related to Tax Positions from Prior Years		(24,486)		(20,607)
Increases Related to Tax Positions Taken During the Current Year		—		24,486
Gross Unrecognized Tax Benefit--Ending Balance	$	76,403	$	100,889