INCOME TAXES

The components of loss before (provision) benefit for income taxes are as follows:



	For the Years Ended December 31,
	2018			2017			2016
United States	$	(125,177	)	$	(109,678	)	$	(69,976	)
Foreign	5,167			1,652			(2,107		)
Total	$	(120,010	)	$	(108,026	)	$	(72,083	)

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



	For the Years Ended December 31,
	2018			2017			2016
Current:
Federal	$	(11	)	$	(10,608	)	$	(2,001	)
State	(19		)	(940		)	(216		)
Foreign	—			7			8
	$	(30	)	$	(11,541	)	$	(2,209	)
Deferred:
Federal	12			(5,256		)	(93		)
State	19			19			(11		)
Foreign	—			—			—
	31			(5,237		)	(104		)
Total income tax provision (benefit)	$	1		$	(16,778	)	$	(2,313	)

The income tax provision (benefit) differs from that computed using the applicable federal statutory rate, as applied to income before taxes in each year as follows:



	For the Years Ended December 31,
	2018			2017			2016
Tax provision computed at the federal statutory rate	$	(25,202	)	$	(37,809	)	$	(25,217	)
State tax, net of federal benefit	(4,827		)	(1,849		)	(307		)
Research credits	(4,884		)	(1,176		)	(3,232		)
Change in tax credit carryforwards	(3,056		)	386			11,042
Officers compensation	600			(9,292		)	1,196
Stock based compensation	(12,610		)	(2,735		)	588
Permanent items and other	(116		)	1,450			12
Tax differential on foreign earnings	(32		)	33			15
Change in tax rate	(1,329		)	37,769			(744		)
Refundable ATM credit	—			(1,336		)	—
Uncertain tax positions	—			(561		)	—
Change in prior year deferred taxes	6,595			(1,218		)	—
Valuation allowance	44,862			(440		)	14,334
Income tax provision (benefit)	$	1		$	(16,778	)	$	(2,313	)

Significant components of our deferred tax assets and liabilities as of December 31, 2018 and 2017 are presented below. A valuation allowance has been recognized to offset the net deferred tax assets as realization of such deferred tax assets did not meet the “more-likely-than-not” threshold under GAAP.



	December 31,
	2018			2017
Deferred tax assets:
Net operating loss carry forwards	$	106,446		$	60,771
Research credits	21,618			14,255
Stock based compensation	5,057			10,046
Deferred revenue	—			1,017
Development costs	3,938			4,143
Returns and allowances	1,976			1,636
Other, net	(5,066		)	—
Total deferred tax assets before valuation allowance	133,969			91,868
Valuation allowance	(131,042		)	(86,021		)
Total deferred tax assets	2,927			5,847
Deferred tax liabilities:
Basis difference in debt	—			(28		)
Depreciation and amortization differences	(4,396		)	(6,836		)
Other, net	—			(421		)
Net deferred tax liabilities	$	(1,469	)	$	(1,438	)

At December 31, 2018 and 2017, we recorded a valuation allowance of $131.0 million and $86.0 million, respectively. The valuation allowance increased by $45.0 million and $0.8 million during 2018 and 2017, respectively. The increase in the valuation allowance in 2018 and 2017 was due to an increase in net operating loss carryforwards.

We had federal and state net operating loss carryforwards of approximately $452.0 million and $241.6 million, at December 31, 2018, respectively. We have approximately $4.5 million of foreign loss carryforwards that will begin to expire in 2022. The federal and state loss carry forwards began to expire in 2018 and 2017, respectively, unless previously utilized. At December 31, 2018, we had federal and state tax credits of approximately $15.2 million and $8.2 million, respectively. The federal tax credit carryovers begin to expire in 2027 unless previously utilized. The state research and development credit carryforwards have an indefinite carryover period.

As a result of the prior ownership changes, the utilization of certain net operating loss and research and development tax credit carryforwards including those acquired in connection with the acquisition of Allos and Talon are subject to annual limitations under Sections 382 and 383 of the Internal Revenue Code of 1986 and similar state provisions. Any net operating losses or credits that would expire unutilized as a result of Section 382 and 383 limitations have been removed from the table of deferred tax assets and the accompanying disclosures of net operating loss and research and development carryforwards.

Accounting guidance clarifies the accounting for uncertain tax positions and prescribes a recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. Additionally, the authoritative guidance addresses the de-recognition, classification, accounting in interim periods and disclosure requirements for uncertain tax positions. Only tax positions that meet the more-likely-than-not recognition threshold at the effective date may be recognized.

The following tabular reconciliation summarizes activity related to unrecognized tax benefits:



	For the Years Ended December 31,
	2018			2017			2016
Balance at beginning of year	$	2,715		$	3,271		$	4,498
Adjustments related to prior year tax positions	(551		)	(39		)	(1,638		)
Increases related to current year tax positions	1,084			374			411
Decreases due to expiration of tax statutes	—			(891		)	—
Balance at end of year	$	3,248		$	2,715		$	3,271

We continue to believe that our tax positions meet the more-likely-than-not standard required under the recognition phase of the authoritative guidance. However, we consider the amounts and probabilities of the outcomes that can be realized upon ultimate settlement with the tax authorities and determined unrecognized tax benefits primarily related to credits should be established as noted in the summary rollforward above.

Approximately $0.2 million, $0.2 million, and $0.7 million of the total unrecognized tax benefits as of December 31, 2018, 2017, and 2016, respectively, would reduce our annual effective tax rate if recognized. Additional amounts in the summary rollforward could impact our effective tax rate if we did not maintain a full valuation allowance on our net deferred tax assets.

We do not expect our unrecognized tax benefits to change significantly over the next 12 months. With a few exceptions, we are no longer subject to U.S. federal, state and local income tax examinations for years before 2014. Our policy is to recognize interest and/or penalties related to unrecognized tax benefits in income tax expense in the consolidated statements of operations.

On January 1, 2017, we adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, on a prospective basis. Under ASU 2016-09, differences between the tax deduction for share based awards and the related compensation expenses recognized under ASC 718 are now accounted for as a component of the provision for income taxes. In addition, ASU 2016-09 eliminated the requirement that excess tax benefits from share based compensation reduce taxes payable prior to being recognized in the financial statements. As of December 31, 2016, we had cumulative excess benefits related to share based compensation of $2.7 million which had not been reflected as a deferred tax asset. As a result of the adoption of ASU 2016-09, the excess benefits were reclassified to our net operating loss carryover resulting in an increase in our deferred tax assets and valuation allowance of $2.7 million as of January 1, 2017. There is no impact to retained earnings as a result of the adoption of ASU 2016-09 on January 1, 2017.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning in 2018, the transition of U.S international taxation from a worldwide tax system to a territorial system, which includes a new federal tax on global intangible low-taxed income (Global Minimum Tax or GMT), and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Company calculated its best estimate of the impact of the Tax Act in its 2017 income tax provision in accordance with its understanding of the Tax Act and guidance available as of the date of the 10-K filing for the year ended December 31, 2017.

In addition, the SEC Staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. The provisional amounts were subject to revisions as the Company completed its analysis of the Tax Act, collected and prepared necessary data, and interpreted any additional guidance issued by the U.S. Treasury Department, Internal Revenue Service, or IRS, FASB, and other standard-setting and regulatory bodies. The measurement period expired as of December 31, 2018 and the Company's accounting for the Tax Act is complete. The changes in 2018 to provisional amounts recorded in 2017 for the effects of the Tax Act were not material.