For each of the years ended and the Company recorded a provision for income taxes of million. The provision for income taxes for the years ended and primarily relates to accrued withholding taxes that would be due in connection with the payment of interest on intercompany loans. Other than the above mentioned provision for income taxes, additional provision for income taxes has been made, net of the valuation allowance, due to cumulative losses since the commencement of operations.

 

The components of income (loss) before income taxes, loss from investments in affiliates and noncontrolling interest are as follows for the years ended and (in thousands):

 

		Years Ended December 31,
		2016				2015				2014
United States		$	(101,210	)		$	(188,943	)		$	10,847
Foreign			4,429				(24,457	)			(5,275	)
Income (loss) before income taxes and loss from investments in affiliates		$	(96,781	)		$	(213,400	)		$	5,572

 

The components of the provision for income taxes are as follows for the years ended and (in thousands):

 

		Years Ended December 31,
		2016				2015				2014
Current:
Federal		$	—			$	—			$	—
State			—				—				—
Foreign			553				468				495
Total current provision			553				468				495
Deferred:
Federal			—				—				—
State			—				—				—
Foreign			—				—				—
Total deferred provision			—				—				—
Total provision for income taxes		$	553			$	468			$	495

 

A reconciliation between the statutory federal income tax and the Company’s effective tax rates as a percentage of income (loss) before income taxes is as follows:

 

		Years Ended December 31,
		2016				2015				2014
Statutory tax rate			(34.0	)%			(34.0	)%			(34.0	)%
State tax rate, net of federal benefit			0.0	%			(0.3	)%			23.3	%
Stock-based compensation			—	%			0.1	%			(2.8	)%
Federal R&D credit			(0.8	)%			(0.6	)%			31.0	%
Derivative liabilities			1.4	%			3.6	%			541.5	%
Non-Deductible Interest			5.0	%			5.5	%			0.0	%
Other			(3.2	)%			0.1	%			(7.8	)%
Foreign losses			0.5	%			(1.2	)%			32.3	%
Change in valuation allowance			31.7	%			27.1	%			(592.4	)%
Effective income tax rate			0.6	%			0.3	%			(8.9	)%

 

 

Temporary differences and carryforwards that gave rise to significant portions of deferred taxes are as follows (in thousands):

 

		December 31,
		2016				2015				2014
Net operating loss carryforwards		$	236,741			$	207,241			$	195,536
Fixed assets			12,917				10,519				1,299
Research and development credits			17,348				16,612				14,701
Foreign Tax Credit			2,452				1,899				1,431
Accruals and reserves			30,303				26,366				16,425
Stock-based compensation			17,184				19,048				18,773
Capitalized start-up costs			9,182				9,568				13,095
Capitalized research and development costs			65,962				63,339				56,880
Other			6,714				9,999				6,700
Total deferred tax assets			398,803				364,591				324,840
Fixed assets			—				—				—
Debt discount and derivative			(11,936	)			(4,402	)			(12,517	)
Total deferred tax liabilities			(11,936	)			(4,402	)			(12,517	)
Net deferred tax asset prior to valuation allowance			386,867				360,189				312,323
Less: Valuation allowance			(386,867	)			(360,189	)			(312,323	)
Net deferred tax assets (liabilities)		$	—			$	—			$	—

 

Recognition of deferred tax assets is appropriate when realization of such assets is more likely than not. Based upon the weight of available evidence, especially the uncertainties surrounding the realization of deferred tax assets through future taxable income, the Company believes it is more likely than not that the net deferred tax assets will be fully realizable. Accordingly, the Company has provided a full valuation allowance against its net deferred tax assets as of   and The valuation allowance increased by million, million, and million, during the years ended and respectively.

 

As of the Company had federal net operating loss carryforwards of approximately million, and state net operating loss carryforwards million, available to reduce future taxable income, if any. As of approximately million, of the federal loss carryforwards and million of state net operating loss carryforwards, respectively, related to excess stock-based compensation, and accordingly no deferred tax asset is recognized for such amounts prior to the adoption of ASU - discussed above in the section of Note “Summary of Significant Accounting Policies.” Any deferred tax asset recognized on adoption of ASU - related to excess stock-based compensation, net of any applicable valuation allowance, will be recorded to retained earnings as of the date of adoption.

 

During the year ended unrecognized tax benefits of million were resolved in connection with the outcome of a California Supreme Court case, involving another taxpayer, that concluded on a methodology which follows that certain of the Company’s net operating losses cannot be sustained. The decision had no impact on the Company’s gross deferred tax assets as presented, as the Company’s deferred tax asset for net operating losses was previously reported, net of a reserve for this same item.

 

As of the Company had federal research and development credits of million and California research and development credit carryforwards of million.

 

The Tax Reform Act of (TRA) and similar state provisions limit the use of net operating loss and credit carryforwards in certain situations where equity transactions result in a change of ownership as defined by Internal Revenue Code Section In the event the Company has experienced an ownership change, as defined in the TRA, utilization of its federal and state net operating loss and credit carryforwards could be limited. If not utilized, the federal net operating loss carryforward begins expiring in and the California net operating loss carryforward begins expiring in The federal research and development credit carryforwards will expire starting in if not utilized. The California tax credits can be carried forward indefinitely.

 

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

 

Balance at December 31, 2013		$	6,080
Increases in tax positions for prior period			4,736
Increases in tax positions during current period			6,265
Balance at December 31, 2014		$	17,081
Decreases in tax positions for prior period			(9,404	)
Increases in tax positions during current period			957
Balance at December 31, 2015		$	8,634
Decreases in tax positions for prior period			(314	)
Increases in tax positions during current period			781
Balance at December 31, 2016			9,101

 

The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for taxes. The Company determined that accrual for interest and penalties was required as of or

 

of the tax benefits, if recognized, would affect the effective income tax rate for any of the above years due to the valuation allowance that currently offsets deferred tax assets. The Company does anticipate the total amount of unrecognized income tax benefits will significantly increase or decrease in the next months.

 

The Company’s primary tax jurisdiction is the United States. For United States federal and state tax purposes, returns for tax years and forward remain open and subject to tax examination by the appropriate federal or state taxing authorities. Brazil tax years through the current remain open and subject to examination.

 

As of   the US Internal Revenue Service (IRS) has completed its audit of the Company for tax year which concluded that there were adjustments resulting from the audit. While the statutes are closed for tax year the US federal tax carryforwards (net operating losses and tax credits) be adjusted by the IRS in the year in which the carryforward is utilized.