There is no provision for income taxes because the Company has incurred operating losses and capitalized certain items for income tax purposes since its inception and maintains a full valuation allowance against its net deferred tax assets. The reported amount of income tax expense for the period differs from the amount that would result from applying the federal statutory tax rate to net loss before taxes primarily because of the change in valuation allowance.

On March 27, 2020, the CARES Act, an economic relief package in response to the COVID-19 pandemic, was signed into law. The CARES Act contains several corporate income tax provisions, including making remaining alternative minimum tax credits immediately refundable; providing a 5-year carryback of NOL carryforwards generated in tax years 2018, 2019, and 2020, and removing the 80% taxable income limitation on utilization of those NOLs if carried back to prior tax years or utilized in tax years beginning before 2021; and temporarily liberalizing the interest deductibility rules under Section 163(j) of the Tax Cuts and Jobs Act, by raising the adjusted taxable income limitation from 30% to 50% for tax years 2019 and 2020 and giving taxpayers the election of using 2019 adjusted taxable income for purposes of computing 2020 interest deductibility. The CARES Act did not have a material effect on the realizability of deferred income tax assets or tax expense in 2020.

The effective tax rate of the Company's provision (benefit) for income taxes differs from the federal statutory rate as follows:

	For the Year Ended December 31, 2020			For the Period from September 20, 2019 (date of inception) to December 31, 2019
Statutory rate		21.00	%		21.00	%
State tax		0.06	%		—
General business credits		1.06	%		—
Other permanent differences		(0.25	)%		—
Change in valuation allowance		(15.91	)%		(21.00	)%
Change in fair value of tranche liability		(5.96	)%		—
Income tax provision (benefit)		0.00	%		0.00	%

Deferred tax assets reflect the tax effects of NOLs, tax credit carryovers, and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At December 31, 2020 and December 31, 2019, the significant components of the Company’s net deferred tax asset are as follows (in thousands):

	For the Year Ended December 31, 2020			For the Period from September 20, 2019 (date of inception) to December 31, 2019
Net operating loss carryforwards	$	5,810		$	—
Tax credit carryforwards		672			—
Accruals and reserves		334			—
Other		21			—
Intangibles		2,390			206
Organizational and start-up costs		—			28
Non-qualified stock options		555			—
Total deferred tax assets		9,782			234
Valuation allowance		(9,782	)		(234	)
Deferred tax asset, net of allowance	$	—		$	—

There are no deferred tax liabilities as of December 31, 2020 and December 31, 2019, respectively. The valuation allowance is equal to the total deferred tax asset amounts as of December 31, 2020 and December 31, 2019 as there are no deferred tax liabilities in the respective periods. ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is "more likely than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance.

The valuation allowance increased by $9.5 million during the year ended December 31, 2020 and by $0.2 million for the period from Inception to December 31, 2019.

There were no net operating loss and tax credit carryforwards as of December 31, 2019. As of December 31, 2020, there were net federal operating losses of $27.7 million, federal tax credit carryforward of $0.9 million, and state tax credit carryforward of less than $0.1 million. The net operating losses and state tax credit carryforward do not expire. The federal tax credit carryforward will expire in 2040. The Company files federal and state income tax returns and, in the normal course of business, the Company is subject to examination by these taxing authorities.

Pursuant to Section 382 of the Internal Revenue Code, certain substantial changes in the Company's ownership may result in a limitation on the amount of NOL carryforwards and tax credit carryforwards that may be used in future years. Utilization of the NOL and tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. The Company has not completed a study to assess whether an ownership change has occurred, or whether there have been multiple ownership changes since its formation. There could also be additional ownership changes in the future which may result in additional limitations on the utilization of NOL carryforwards and credits.