12. Income Taxes

        At December 31, 2017, the Company had federal net operating loss ("NOL") carryforwards of approximately $40.4 million and state operating loss carryforwards of approximately $10.0 million, available to reduce future taxable income, which expire between 2031 and 2037. The Company has unused federal research and development carryforwards of approximately $1.7 million which will begin to expire in 2031.

        The Internal Revenue Code ("IRC") limits the amounts of NOL carryforwards that a Company may use in any one year in the event of certain cumulative changes in ownership over a three-year period as described in Section 382 of the IRC. Such change in ownership could limit the Company's utilization of the NOL, and could be triggered by subsequent sales of securities by the Company or stockholders. The deferred tax asset related to the NOL reflected on the financial statements could be affected by this limitation. Although a formal analysis has not been completed, the Company has determined that an ownership change likely occurred for Madrigal during the year ended December 31, 2017. The net operating losses are expected to be subject to an annual limitation; however, none of these NOLs is expected to expire before becoming available to reduce future taxable income.

        The Company has analyzed the tax effect of the merger and concluded that an ownership change did take place for IRC 382 purposes. Based on the value of the business, Synta's federal net operating losses and R&D credits are no longer available to be used by the Company. Further, the Company has concluded that the transaction did not trigger an ownership change for Madrigal.

        In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As there is no assurance of future taxable income, a full valuation allowance has been established to offset the deferred tax assets. The valuation allowance increased $2.9 million for the year ended December 31, 2017. Changes in the deferred tax asset will be recorded as an income tax benefit or expense on the accompanying statements of operations.

        Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2017 there were no uncertain positions. The 2012 through 2016 tax returns are open to review by the IRS and state taxing authorities. Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision. There was no income tax related interest and penalties included in the income tax provision for 2017.

        On December 22, 2017, H.R. 1 (also, known as the Tax Cuts and Jobs Act (the "Act")) was signed into law. Among its numerous changes to the Internal Revenue Code, the Act reduces U.S. federal corporate tax rate from 34% to 21%. As a result, the most significant impact on the Company's consolidated financial statements will be reduction of approximately $9.3 million for the deferred tax assets related to net operating losses and other assets. Such reduction is offset by changes to the Company's valuation allowance. The Company has completed the accounting for the tax impact of the Act as of December 31, 2017 and has recorded no provisional amounts.

        Temporary differences that give rise to deferred tax assets and liabilities are as follows (in thousands):

                                                                                                                                                                                                          

        Differences between the effective income tax rate and the US statutory rate were as follows (in thousands):