14. Income Taxes

The Company is subject to U.S. federal and various state corporate income taxes as well as taxes in foreign jurisdictions for the foreign parent and where foreign subsidiaries have been established. For the years ended December 31, 2016, 2015 and 2014, the loss before provision for income taxes consist of the following (in thousands):

	Year ended December 31,
	2016			2015			2014
Domestic	$	3,322		$	593		$	—
Foreign		(26,040	)		(26,414	)		(6,863	)
Total	$	(22,718	)	$	(25,821	)	$	(6,863	)

The provision for (benefit from) income taxes consist of the following (in thousands):

	Year ended December 31,
	2016			2015			2014
Current income taxes:
Federal	$	(649	)	$	(23	)	$	—
State		11			(12	)		—
Foreign		17			(26	)		(11	)
Total current income taxes		(621	)		(61	)		(11	)
Deferred income taxes:
Federal		30			(37	)		—
State		105			65			—
Foreign		2			26			74
Total deferred income taxes		137			54			74
Total income tax (provision) benefit	$	(484	)	$	(7	)	$	63

A reconciliation of income tax expense computed at the statutory corporate income tax rate to the effective income tax rate for the years ended December 31, 2016, 2015 and 2014 is as follows:

	Year ended December 31,
	2016			2015			2014
Income tax expense at statutory rate		10.3	%		10.3	%		10.3	%
State income tax, net of federal benefit		1.3	%		0.1	%		0.0	%
Nondeductible expenses		1.6	%		0.0	%		0.0	%
Foreign rate differential		(3.3	%)		(1.4	%)		1.8	%
Statutory to US GAAP permanent differences		6.6	%		0.0	%		0.0	%
Stock-based compensation		(4.9	%)		(1.4	%)		(1.1	%)
Research credits		3.1	%		0.6	%		0.0	%
Change in valuation allowance		(16.8	%)		(8.2	%)		(10.1	%)
Effective income tax rate		(2.1	%)		0.0	%		0.9	%

The federal statutory rate reflects the Switzerland mixed company service rate.

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets are comprised of the following (in thousands):

	Year ended December 31,
	2016			2015
Deferred tax assets:
Net operating loss carryforwards	$	3,934		$	2,600
Accruals and reserves		791			189
Deferred Rent		5,228			—
Other deferred tax assets		7			72
Deferred revenue		2,525			406
Research credit		425			104
Total deferred tax assets		12,910			3,371
Less valuation allowance		(6,770	)		(2,892	)
Net deferred tax assets		6,140			479
Deferred tax liabilities:
Depreciation		(5,909	)		(321	)
Intangible assets		(68	)		(80	)
Other deferred tax liabilities		—			(53	)
Total deferred tax liabilities		(5,977	)		(454	)
Long term deferred taxes	$	163		$	25

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company’s history of operating losses in its non-U.S. jurisdictions, the Company has concluded that it is more-likely-than-not that the benefit of its non-U.S. deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance against its net deferred tax assets in Switzerland, and in the UK for its TRACR subsidiary, as of December 31, 2016 and 2015. The valuation allowance increased by $3.9 million during 2016, which is primarily attributable to losses in Switzerland. Additionally, the Company has established a valuation allowance for certain U.S. deferred tax assets.

As of December 31, 2016, the Company had available non-U.S. net operating loss carryforwards of $41.7 million which begin to expire in 2020. As of December 31, 2016, the Company has U.S. domestic state research and development credit carryforwards of $0.2 million which begin to expire in 2031.

As of December 31, 2016, the Company has U.S. domestic federal research and development credit carryforwards of $0.3 million which expire in 2036.

ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statement by prescribing the minimum recognition threshold and measurement of a tax position taken or expected to be taken in a tax return.

As of December 31, 2016 the Company had gross unrecognized tax benefits of $0.2 million of which $0.1 million would favorably impact the effective tax rate if recognized. The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2016, 2015 and 2014, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s consolidated statements of operations and comprehensive loss.

The aggregate changes in gross unrecognized tax benefits was as follows (in thousands):

	Year ended December 31,
	2016			2015		2014
Balance at beginning of year	$	49		$	—	$	—
Increases for tax positions taken during current period		134			49		—
Increases for tax positions taken in prior periods		—			—		—
Decreases for tax positions taken during current period		—			—		—
Decreases for tax positions taken in prior periods		(20	)		—		—
Balance at end of year	$	163		$	49	$	—

The Company files income tax returns in the U.S. federal jurisdiction, Massachusetts, and certain non-U.S. jurisdictions. The Company is subject to U.S. federal, Massachusetts, and non-U.S. income tax examinations by authorities for all tax years.