INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 8: INCOME TAXES

The components of income (loss) before income taxes were as follows:

	Year ended December 31,
(in thousands)	2019		2020		2021
Domestic	$	(104,690)	$	14,773	$	(3,685,936)
Foreign	(2,897)		(943)		1,504
Income (loss) before income taxes	$	(107,587)	$	13,830	$	(3,684,432)

The components of the provision for (benefit from) income taxes were as follows:

	Year ended December 31,
(in thousands)	2019		2020		2021
Current:
Federal	$	(58)	$	2,780	$	(249)
State	(295)		3,801		4,990
Foreign	—		—		—
Total current tax expense (benefit)	(353)		6,581		4,741
Deferred:
Federal	—		—		(1,084)
State	—		—		(1,525)
Foreign	(665)		(200)		(132)
Total deferred tax expense (benefit)	(665)		(200)		(2,741)
Total provision for (benefit from) income taxes	$	(1,018)	$	6,381	$	2,000

The reconciliation of federal statutory income tax to our provision for (benefit from) income taxes was as follows:

	Year ended December 31,
(in thousands)	2019		2020		2021
Federal tax benefit at statutory rate	$	(22,593)	$	2,905	$	(773,731)
State tax benefit, net of federal benefit	(5,491)		(862)		(131,494)
Foreign rate differential	(57)		(2)		(448)
Share-based compensation	(1,221)		(2,654)		17,338
Tender offer compensation	4,229		3,607		1,640
Research and development credits	(2,104)		(10,489)		(48,111)
Non-deductible regulatory settlements	—		21,000		10,920
Non-deductible change in convertible notes and warrant	—		—		429,588
Permanent differences	—		526		322
Other	905		52		367
Change in valuation allowance	25,314		(7,702)		495,609
Total provision for (benefit from) income taxes	$	(1,018)	$	6,381	$	2,000

Significant components of our deferred tax assets and liabilities consist of the following:

	Year ended December 31,
(in thousands)	2020		2021
Deferred tax assets:
Accruals and other liabilities	14,849		$	24,319
Lease liabilities	13,794		39,909
Tax credit carryforwards	9,058		81,457
Net operating loss carryforwards	3,141		251,202
Share-based compensation	3,123		134,723
Other	3,386		21,411
Total deferred tax assets	47,351		553,021
Deferred tax liabilities:
Right of use assets	(12,551)		(34,182)
Depreciation and amortization	(6,965)		(22,977)
Total deferred tax liabilities	(19,516)		(57,159)
Valuation allowance	(26,909)		(494,902)
Net deferred tax assets	$	926	$	960

The following is a reconciliation of the beginning and ending amount of the deferred tax asset valuation allowance:

	Year ended December 31,
(in thousands)	2019		2020		2021
Balance at beginning of period	$	9,631	$	35,207	$	26,909
Charged/(credited) to net income	25,576		(8,298)		470,691
Charges utilized/(write-offs)	—		—		(2,698)
Balance at end of period	$	35,207	$	26,909	$	494,902

The realization of tax benefits of net deferred assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable.

Based on all available evidence for the year ending December 31, 2021, we believe it is more likely than not that the tax benefits of the remaining U.S. federal and state net deferred tax assets may not be realized, and accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by approximately $468.0 million for the year ended December 31, 2021.

As of December 31, 2021, we have $944.3 million of U.S. federal, $823.9 million of state, and $5.1 million of non-U.S. net operating loss carryforwards available to reduce future taxable income. Of the U.S. federal net operating loss carryforwards, $1.0 million will begin to expire in 2037 and the $943.3 million will carryforward indefinitely. Our state net operating losses begin to expire in 2022, while our non-U.S. net operating losses do not expire. We have U.S. federal tax credit carryforwards of $80.8 million that will begin to expire in 2040, if not utilized, and state tax credit carryforwards of $2.2 million that will begin to expire in 2026 and $52.4 million that do not expire.

Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and tax credits before utilization.

We had unrecognized tax benefits of approximately $7.4 million and $46.2 million as of December 31, 2020 and 2021. These unrecognized tax benefits, if recognized, would not affect the effective tax rate. We record interest and penalties related to unrecognized tax benefits in income tax expenses. There were no interest or penalties during the years ended December 31, 2020 and 2021.

The reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	Year ended December 31,
	2020		2021
Unrecognized benefit - beginning of period	$	2,177	$	7,420
Gross increases - current year tax positions	4,395		37,879
Gross increases - prior year tax positions	848		909
Unrecognized benefit - end of period	$	7,420	$	46,208

We file in U.S. federal, various state, and foreign jurisdictions. The tax years from 2013 remain open to examination by the U.S. federal and state authorities, due to carryover of unused net operating losses and tax credits. The tax years from 2018 remain open for the most significant foreign jurisdiction.