On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). The TCJA reduced the U.S. statutory corporate tax rate to 21%, effective January 1, 2018. Consequently, we recorded a decrease to the Company’s federal deferred tax assets of $38.7 million, which was fully offset by a reduction in the Company’s valuation allowance for the year ended December 31, 2017. The other provisions of the TCJA did not have an impact on the Company’s financial statements as of December 31, 2017 or December 31, 2018.

In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the TCJA (“SAB 118”), which allowed companies to record provisional amounts during a measurement period not to extend beyond one year of the TCJA enactment date. In the fourth quarter of 2018, we completed our accounting for the TCJA and we did not have any adjustments to provisional amounts recorded as of December 31, 2017.

The following reconciles the differences between income taxes computed at the federal income tax rate and the provision for income taxes:

	Year Ended December 31,
	2018				2017				2016
Expected income tax benefit at the federal statutory rate		21.0		%		34.0		%		34.0		%
State taxes, net of federal benefit		0.0				0.0				0.0
Change in federal statutory rate		0.0				(54.1	)			0.0
Non-deductible items and other		(0.2	)			0.5				(0.7	)
Federal and state credits		0.7				0.5				0.6
Change in valuation allowance		(21.5	)			19.1				(33.9	)
Total		0.0		%		0.0		%		0.0		%

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The principal components of the Company’s net deferred tax assets consisted of the following at December 31, 2018 and 2017 (in thousands):

	Year Ended December 31,
	2018			2017
Net operating loss carryforwards	$	76,753		$	61,049
Research and development tax credits		4,699			3,731
Reserves and accruals		1,444			1,168
Other		9,109			6,611
Total deferred tax assets		92,005			72,559
Valuation allowance		(92,005	)		(72,559	)
Net deferred tax assets	$	—		$	—

The Company maintains a valuation allowance related to its deferred tax asset position when management believes it is more likely than not that the net deferred tax assets will not be realized in the future. The Company’s valuation allowance increased by $19.4 million and decreased by $11.0 million during the year ended December 31, 2018 and 2017, respectively.

At December 31, 2018, the Company had federal net operating loss carryforwards of $330.8 million, which begin to expire in the year ending December 31, 2024, and $198.1 million related to state net operating loss carryforwards, which begin to expire in the year ending December 31, 2019. The Company had federal research and development tax credit carryforwards of $4.6 million, and state carryforwards of $2.0 million at the year ended December 31, 2018. These credits expire at various dates through the year ending December 31, 2024.

Under the provisions of the Internal Revenue Code, or IRC, net operating loss and credit carryforwards and other tax attributes may be subject to limitation if there has been a significant change in ownership of the Company, as defined by the IRC. The Company performed a Section 382 analysis in February of 2018 and two ownership changes were identified, none of which had a corresponding limitation of tax attributes. Future owner or equity shifts could result in limitations on net operating loss and credit carryforwards.

Because of the net operating loss and credit carryforwards, all of the Company’s federal tax returns and state returns since the year ended December 31, 2004 remain subject to federal and California examination.

The Company accounts for uncertain tax positions using a “more-likely-than-not” threshold. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company evaluates these tax positions on an annual basis. In addition, the Company also accrues for potential interest and penalties related to unrecognized tax benefits in income tax expense.

At December 31, 2018 and 2017, the Company’s unrecognized tax benefits consist of the following:

	Year Ended December 31,
	2018		2017
Unrecognized tax benefit, beginning of period	$	1,135	$	940
Gross increases — current year tax positions		422		327
Gross increases — prior year tax positions		38		73
Gross decreases — prior year tax positions		—		(205	)
Unrecognized tax benefit, end of period	$	1,595	$	1,135