Income Taxes

12 Months Ended

Dec. 31, 2019

Income Taxes

The components of the provision for income taxes for the periods indicated are as follows (in thousands):


	Year Ended December 31,
	2019		2018		2017
United States	$	(2,600,858)	$	(900,642)	$	(687,743)
Foreign	973		(9,955)		(2)
Loss before income taxes	$	(2,599,885)	$	(910,597)	$	(687,745)

The provision for income taxes for the periods indicated are as follows (in thousands):


	Year Ended December 31,
	2019		2018		2017
Current provision
Federal	$	—	$	—	$	—
State	2,704		1,250		556
Foreign	1,901		116		—
Total current	$	4,605	$	1,366	$	556

Deferred provision
Federal	(269)		—		—
State	(891)		—		—
Foreign	(1,089)		(628)		—
Total deferred	(2,249)		(628)		—
Total provision for income taxes	$	2,356	$	738	$	556

A reconciliation of the U.S. federal statutory income tax rates to the Company’s effective tax rate is as follows:


	Year Ended December 31,
	2019		2018		2017
Provision at federal statutory rate	21.0	%	21.0	%	34.0	%
State, net of federal benefit	7.6		6.0		3.7
Permanent tax adjustments	(0.4)		(0.8)		(0.6)
Federal statutory tax rate change	—		—		(34.8)
Stock-based compensation	9.9		0.8		(0.2)
Change in valuation allowance	(38.1)		(27.6)		(2.3)
Other adjustments	(0.2)		0.5		0.1
Provision for income taxes	(0.2)	%	(0.1)	%	(0.1)	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes at the enacted rates. The significant components of the Company’s deferred tax assets and liabilities as of the periods indicated were as follows (in thousands):


	December 31,
	2019		2018
Net operating loss carryforward	$	1,173,732	$	475,823
Insurance reserves	391,250		239,401
Accrued and other liabilities	369,018		83,187
Total deferred tax assets	1,934,000		798,411
State income taxes	(92,585)		(39,902)
Operating lease right of use asset	(88,376)		—
Total deferred tax liabilities	(180,961)		(39,902)
Net deferred tax asset	1,753,039		758,509
Less: Valuation allowance	(1,751,118)		(761,728)
Net deferred tax asset (liability)	$	1,921	$	(3,219)

A reconciliation of the valuation allowance is as follows (in thousands):


	Year Ended December 31,
	2019		2018		2017
Beginning balance	$	761,728	$	507,274	$	491,356
Net changes in deferred tax assets and liabilities	989,390		254,454		15,918
Ending balance	$	1,751,118	$	761,728	$	507,274

The valuation allowance increased by $989.4 million for the year ended December 31, 2019, compared to the increase of $254.5 million for the year ended December 31, 2018. The Company believes that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a valuation allowance has been recorded. These factors include the Company’s history of net losses since its inception.

As of December 31, 2019, the Company had U.S. federal, state and foreign net operating loss carryforwards of approximately $4.2 billion, $3.8 billion and $8.3 million, respectively.

The federal net operating loss carryforwards generated through December 31, 2017 expire at various dates beginning in 2030 and will continue to expire through 2037, while federal net operating loss carryforwards generated in 2018 or later do not expire. The state net operating loss carryovers will begin to expire in 2022 and will continue to expire through 2039. The foreign net operating loss carryovers will begin to expire in 2037. Utilization of the net operating loss carryforwards are subject to various limitations due to the ownership change limitations provided by Internal Revenue Code (IRC) Section 382 and similar state provisions.

The Company files income tax returns with the U.S. federal government, various state jurisdictions and certain foreign jurisdictions. The Company’s tax returns in all jurisdictions remain open to examination.

The Company began having foreign operations in fiscal year 2017. At that time and prior to the enactment of the Tax Act, the Company had indefinite investment assertion on all of its undistributed earnings from foreign subsidiaries. As a result of the enactment of the Tax Act, the Company has reevaluated its historic assertion and continues to assert these earnings to be indefinitely reinvested.

The Company’s policy is to recognize interest and penalties associated with uncertain tax benefits as part of the income tax provision and include accrued interest and penalties with the related income tax liability on the Company’s consolidated balance sheets. To date, the Company has not recognized any interest and penalties in its consolidated statements of operations, nor has it accrued for or made payments for interest and penalties. The Company has no material unrecognized tax benefits as of December 31, 2019, 2018 and 2017.