

	Year Ended December 31, 2019		Transition Period Ended December 31, 2018		Fiscal Year Ended June 30,
	Year Ended December 31, 2019		Transition Period Ended December 31, 2018		2018		2017
Federal
Current	$	—	$	—	$	—	$	—
Deferred	—		—		—		—
Total Federal	—		—		—		—
State
Current	—		—		2		1
Deferred	—		—		—		—
Total State	—		—		2		1
Foreign
Current	—		—		154		19
Deferred	—		—		—		—
Total Foreign	—		—		154		19
Total income tax expense	$	—	$	—	$	156	$	20

A reconciliation of the statutory tax rates and the effective tax rates for the year ended December 31, 2019, the transition period ended December 31, 2018 and fiscal years ended June 30, 2018 and 2017 is as follows:



	Year Ended December 31, 2019		Transition Period Ended December 31, 2018		Fiscal Year Ended June 30,
	Year Ended December 31, 2019		Transition Period Ended December 31, 2018		2018		2017
Statutory rate	(21.0	)%	(21.0	)%	(28.0	)%	(34.0	)%
Foreign income tax	—	%	—	%	—	%	—	%
Change in valuation allowance	29.9	%	34.4	%	21.1	%	21.9	%
State income taxes, (net of federal tax benefit)	(7.5	)%	(8.8	)%	(4.3	)%	(4.8	)%
Permanent differences, (primarily warrant-related expenses)	(1.4	)%	(4.2	)%	11.3	%	15.3	%
Other	—	%	(0.4	)%	—	%	1.6	%
Effective rate	—	%	—	%	0.1	%	—	%

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities as of December 31, (in thousands):



	2019			2018
Deferred tax assets:
NOL carryforwards	$	203,928		$	132,841
Research and development credits	28,535			23,118
Liability related to sale of future royalties	49,228			49,217
Deferred revenue	18,286			—
Disallowed interest expense	13,474			—
Other	5,807			3,088
Total	319,258			208,264
Valuation allowance	(317,828		)	(206,397		)
Net deferred assets	$	1,430		$	1,867
Deferred tax liabilities:
Property and equipment	$	(1,430	)	$	(1,867	)
Net deferred assets and liabilities	$	—		$	—

A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowances for the year ended December 31, 2019, and the Transition Period ended December 31, 2018 have been applied to offset the deferred tax assets in recognition of the uncertainty that such tax benefits will be realized as the Company continues to incur losses. The differences between book income and tax income primarily relate to the temporary differences from depreciation and stock compensation expenses, and deferred book income that is realized for tax.

At December 31, 2019, and the Transition Period ended December 31, 2018, the Company has available net operating loss carry forwards for federal income tax reporting purposes of approximately $769.1 million and $516.6 million for state income tax reporting purposes of approximately $593.6 million and $343.0 million, respectively, which expire at various dates between 2020 and 2038. For tax years 2018 onward, Federal net operating losses have an indefinite life but are limited to annual utilization by 80% taxable income.

The Company accounts for uncertain tax benefits in accordance with the provisions of section 740-10 of the Accounting for Uncertainty in Income Taxes Topic of the FASB ASC. Of the total unrecognized tax benefits at December 31, 2019 and 2018, approximately $2.5 million was recorded in both years as a reduction to deferred tax assets, which caused a corresponding reduction in the Company’s valuation allowance of $2.5 million in both years. The Company does not anticipate that the amount of unrecognized tax benefits as of December 31, 2019 will change materially within the 12-month period following December 31, 2019. The change in unrecognized tax benefits are presented below (in thousands):



	Year Ended December 31, 2019		Transition Period Ended December 31, 2018
	Year Ended December 31, 2019		Transition Period Ended December 31, 2018
Change in unrecognized tax benefits
Balance at beginning of year	$	2,521	$	—
Gross increases related to current period tax positions	—		—
Gross increases related to prior periods tax positions	—		2,521
Gross decreases in tax positions	—		—
Expiration of the statute of limitations	—		—
Balance at end of year	$	2,521	$	2,521

The Company will recognize potential interest and penalties related to income tax positions as a component of the provision for income taxes on the Consolidated Statements of Comprehensive Loss in any future periods in which the Company must record a liability. The Company is subject to examination for United States Federal and Foreign tax purposes for 2013 and forward and for New Jersey 2015 and forward. The Company conducts business and files tax returns in New Jersey.

For fiscal year 2016, the Company sold certain State of New Jersey State Net Operating Losses (“NOL”) and Research and Development (“R&D”) tax credits through the New Jersey Economic Development Authority Technology Business Tax Certificate Transfer Program. Pursuant to such sale, for the year ended June 30, 2016, the Company recorded a tax benefit of $5.1 million, as a result of its sale of approximately $66.2 million, of New Jersey State NOL and $1.5 million of New Jersey R&D tax credits. There were no sales of NOL or R&D for the year ended December 31, 2019, the Transition Period or 2018 or 2017 fiscal years.

The Global Intangible Low-tax Income ("GILTI") provisions of the 2017 Tax Act require the Company to include in its United States income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company expects that it may be subject to incremental United States tax on GILTI income in the future but not for the for the year ended December 31, 2019. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements.

As a result of U.S. tax reform legislation, distributions of profits from non-U.S. subsidiaries are not expected to cause a significant incremental U.S. tax impact in the future. However, distributions may be subject to non-U.S. withholding taxes if profits are distributed from certain jurisdictions. U.S. federal income taxes have not been provided on undistributed earnings of our international subsidiaries as it is our intention to reinvest any earnings into the respective subsidiaries. It is not practicable to estimate the amount of tax that might be payable if some or all of such earnings were to be repatriated due to the legal structure and complexity of U.S. and local tax laws. As of December 31, 2019, and 2018, there are no undistributed earnings.