The benefit (provision) for incomes taxes consists of the following:



	For the years ended December 31,
(In thousands)	2019			2018			2017
Current
Federal	$	—		$	—		$	2,398
State	(89		)	6,318			(1,737		)
Foreign	(2,647		)	(2,738		)	(3,424		)
	(2,736		)	3,580			(2,763		)
Deferred
Federal	333			2,045			(10,759		)
State	125			5,673			(2,738		)
Foreign	(4,782		)	27,428			(2,595		)
	(4,324		)	35,146			(16,092		)
Total, net	$	(7,060	)	$	38,726		$	(18,855	)

Deferred income tax assets and liabilities as of December 31, 2019 and 2018 are comprised of the following:



(In thousands)	December 31, 2019			December 31, 2018
Deferred income tax assets:
Federal net operating loss	$	121,125		$	101,662
State net operating loss	64,648			59,126
Foreign net operating loss	32,162			34,407
Research and development expense	1,560			2,893
Tax credits	22,989			21,669
Stock options	30,640			30,430
Accruals	17,215			6,294
Equity investments	13,495			12,904
Bad debts	445			414
Lease liability	1,064			1,370
Foreign credits	9,909			10,837
Available-for-sale securities	2,478			2,447
Operating lease asset	10,204			—
Other	8,395			11,668
Deferred income tax assets	336,329			296,121
Deferred income tax liabilities:
Intangible assets	(230,662		)	(250,640		)
Convertible Debt	(12,219		)	—
Operating lease liability	(10,204		)	—
Fixed assets	(3,976		)	(3,486		)
Other	(2,130		)	(2,272		)
Deferred income tax liabilities	(259,191		)	(256,398		)
Net deferred income tax assets (liabilities)	77,138			39,723
Valuation allowance	(194,869		)	(154,916		)
Net deferred income tax liabilities*	$	(117,731	)	$	(115,193	)

As of December 31, 2019, we have federal, state and foreign net operating loss carryforwards of approximately $698.3 million, $873.3 million and $139.6 million, respectively, that expire at various dates through 2039 unless indefinite in nature. As of December 31, 2019, we have research and development tax credit carryforwards of approximately $23.0 million that expire in varying amounts through 2039. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. We have determined a valuation allowance is required against all of our net deferred tax assets that we do not expect to be utilized by the reversing of deferred income tax liabilities.

Under Section 382 of the Internal Revenue Code of 1986, as amended, certain significant changes in ownership may restrict the future utilization of our income tax loss carryforwards and income tax credit carryforwards in the U.S. The annual limitation is equal to the value of our stock immediately before the ownership change, multiplied by the long-term tax-exempt rate (i.e., the highest of the adjusted federal long-term rates in effect for any month in the three-calendar-month period ending with the calendar month in which the change date occurs). This limitation may be increased under the IRC Section 338 Approach (IRS approved methodology for determining recognized Built-In Gain). As a result, federal net operating losses and tax credits may expire before we are able to fully utilize them.

During 2008, we conducted a study to determine the impact of the various ownership changes that occurred during 2007 and 2008. As a result, we have concluded that the annual utilization of our net operating loss carryforwards (“NOLs”) and tax credits is subject to a limitation pursuant to Internal Revenue Code Section 382. Under the tax law, such NOLs and tax credits are subject to expiration from 15 to 20 years after they were generated. As a result of the annual limitation that may be imposed on such tax attributes and the statutory expiration period, some of these tax attributes may expire prior to our being able to use them. There is no current impact on these financial statements as a result of the annual limitation. This study did not conclude whether OPKO’s predecessor, eXegenics, pre-merger NOLs were limited under Section 382. As such, of the $698.3 million of federal net operating loss carryforwards, at least approximately $47.4 million may not be able to be utilized.

We file federal income tax returns in the U.S. and various foreign jurisdictions, as well as with various U.S. states and the Ontario and Nova Scotia provinces in Canada. We are subject to routine tax audits in all jurisdictions for which we file tax returns. Tax audits by their very nature are often complex and can require several years to complete. It is reasonably possible that some audits will close within the next twelve months, which we do not believe would result in a material change to our accrued uncertain tax positions.

U.S. Federal: Under the tax statute of limitations applicable to the Internal Revenue Code, we are no longer subject to U.S. federal income tax examinations by the Internal Revenue Service for years before 2016. However, because we are carrying forward income tax attributes, such as net operating losses and tax credits from 2016 and earlier tax years, these attributes can still be audited when utilized on returns filed in the future.

State: Under the statute of limitations applicable to most state income tax laws, we are no longer subject to state income tax examinations by tax authorities for years before 2015 in states in which we have filed income tax returns. Certain states may take the position that we are subject to income tax in such states even though we have not filed income tax returns in such states and, depending on the varying state income tax statutes and administrative practices, the statute of limitations in such states may extend to years before 2015.

On December 22, 2017, the 2017 Tax Act was enacted into law and the new legislation contains several key tax provisions, including a reduction of the corporate income tax rate from 35% to 21% effective January 1, 2018 and a one-time mandatory transition tax on accumulated foreign earnings, among others. We were required to recognize the effect of the tax law changes in the period of enactment, such as remeasuring our U.S. deferred tax assets and liabilities, as well as reassessing the net realizability of our deferred tax assets and liabilities.

Effective January 1, 2018, the Tax Act provides for a new GILTI provision. Under the GILTI provision, certain foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets are included in U.S. taxable income. The Company currently estimates GILTI will be immaterial for the year ended December 31, 2019, although interpretive guidance continues to be issued and future guidance may impact this analysis. The Company has not recorded any

As of December 31, 2019, 2018, and 2017, the total amount of gross unrecognized tax benefits was approximately $17.2 million, $17.5 million, and $21.3 million, respectively. As of December 31, 2019, the total amount of unrecognized tax benefits that, if recognized, would affect our effective income tax rate was $(13.2) million. We account for any applicable interest and penalties on uncertain tax positions as a component of income tax expense and we recognized $(0.1) million and $(1.9) million of interest expense for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2018 and 2017, $(14.2) million and $(12.4) million of the unrecognized tax benefits, if recognized, would have affected our effective income tax rate. We believe it is reasonably possible that approximately $0.5 million of unrecognized tax benefits may be recognized within the next twelve months, mainly due to anticipated statute of limitations lapses in various jurisdictions.

The following summarizes the changes in our gross unrecognized income tax benefits.



	For the years ended December 31,
(In thousands)	2019			2018			2017
Unrecognized tax benefits at beginning of period	$	17,513		$	21,347		$	27,545
Gross increases – tax positions in prior period	—			—			44
Gross increases – tax positions in current period	884			8,384			—
Gross decreases – tax positions in prior period	(298		)	(7,597		)	(1,724		)
Lapse of Statute of Limitations	(939		)	(4,621		)	(4,518		)
Unrecognized tax benefits at end of period	$	17,160		$	17,513		$	21,347

The significant elements contributing to the difference between the federal statutory tax rate and the effective tax rate are as follows:



	For the years ended December 31,
	2019		2018		2017
Federal statutory rate	21.0	%	21.0	%	35.0	%
State income taxes, net of federal benefit	2.8	%	4.3	%	5.1	%
Foreign income tax	(6.6	)%	(6.0	)%	(5.3	)%
Income Tax Refunds	—	%	3.6	%	—	%
Research and development tax credits	0.3	%	1.9	%	0.6	%
Non-Deductible components of Convertible Debt	—	%	(0.2	)%	0.1	%
Valuation allowance	(17.9	)%	(7.1	)%	(28.4	)%
Rate change effect	0.4	%	8.1	%	(10.8	)%
Non-deductible items	(0.7	)%	(2.9	)%	(1.9	)%
Unrecognized tax benefits	—	%	(1.8	)%	(0.7	)%
Impairments	(1.6	)%	—	%	—	%
Other	—	%	(0.7	)%	(0.4	)%
Total	(2.3	)%	20.2	%	(6.7	)%

The following table reconciles our losses before income taxes between U.S. and foreign jurisdictions:



	For the years ended December 31,
(In thousands)	2019			2018			2017
Pre-tax income (loss):
U.S.	$	(236,544	)	$	(132,102	)	$	(247,938	)
Foreign	(71,321		)	(59,664		)	(38,457		)
Total	$	(307,865	)	$	(191,766	)	$	(286,395	)