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Income Taxes
6 Months Ended
Jun. 30, 2019
Income Taxes  
Income Taxes

12. Income Taxes

During the three and six months ended June 30, 2019, the Company recorded total income tax expense of $1.9 million and $2.0 million, respectively. The Company provides testing to clinics and licenses cloud-based software and intellectual property, that are based in a foreign country, which contributed to a foreign income tax expense of approximately $1.9 million and $2.0 million for the three and six months ended June 30, 2019, respectively. In addition, the Company recorded $20,000 in state income tax expense for the three and six months ended June 30, 2019. During the three and six months ended June 30, 2018, the Company recorded total income tax benefit of $0.1 million and $0.2 million, respectively. Total income tax expense included a foreign income tax expense of $65,000 and $0.1 million for the three and six months ended June 30, 2018, respectively. State income tax expense of $48,000 and $92,000 was also recorded during the three and six months ended June 30, 2018, respectively.   

Due to the Company’s history of cumulative operating losses, the Company concluded that, after considering all the available objective evidence, it is not more likely than not that all of the Company’s net deferred tax assets will be realized. Accordingly, all of the Company’s deferred tax assets, which includes net operating loss or NOL carryforwards and tax credits related primarily to research and development, continue to be subjected to a valuation allowance as of June 30, 2019. The Company will continue to maintain a full valuation allowance until there is sufficient evidence to support recoverability of its deferred tax assets.

In December 2017, the U.S. Congress passed the Tax Cuts and Jobs Act of 2017 (“Tax Act”). As a result, corporate tax rate was reduced to 21%, effective January 1, 2018. ASC 740, Income Taxes, requires entities to recognize the effect of the tax law changes in the period of enactment. Shortly after the enactment of the Tax Act, the Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when an entity does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The Company made provisional adjustments to reduce its deferred tax assets and liabilities as of December 31, 2017, based on the reduction of the U.S. federal corporate tax rate from 34% to 21% and assessed the realizability of its deferred tax assets based on its current understanding of the provisions of the new law. As of December 31, 2018, the Company completed its assessment of the tax rate change and determined no additional adjustments were required.

The Company had $8.1 million and $7.4 million in unrecognized tax benefits at June 30, 2019 and December 31, 2018, respectively. The reversal of the uncertain tax benefits would not affect the effective tax rate to the extent that the Company continues to maintain a full valuation allowance against its deferred tax assets. Unrecognized tax benefits may change during the next twelve months for items that arise in the ordinary course of business.

Interest and/or penalties related to income tax matters are recognized as a component of income tax expense. As of June 30, 2019, there were no accrued interest and penalties related to uncertain tax positions.