NOTE

 

de the following (in thousands):

 

 

 

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, an

tax effects of significant items comprising the Company’s deferred taxes after are as follows (in thousands):

 

December 31, 2017 were 

(in thousands):

effective tax rate of the Company’s provision (benefit) for income taxes differs from the federal statutory rate as follows:

 

Other balance in and was reclassified for consistency with current year.

 

ability to realize its net deferred tax assets by evaluating all available evidence, both positive and negative, including () cumulative results of operations in recent years, () sources of recent income (loss), () estimates of future taxable income and () the length of net operating loss and tax credit carryforward periods. Such assessment is required on a jurisdiction-by-jurisdiction basis. In making such assessment, significant weight is given to evidence that can be objectively verified.

December 31,

2017

2016,

’s deferred tax assets were primarily comprised of U.S. Net Operating Loss (“NOL”), tax credit and other deferred tax assets relating to book-to-tax temporary differences. From the quarter of the Company had determined that it was more likely than that all of the net deferred tax assets in the U.S. jurisdictions would be realized. As a result, the Company had recorded and maintained a full valuation allowance against those net deferred tax assets to reduce them to their estimated net realizable value through

.

December 31, 2017,

pany determined that it is more likely than that a portion of the net deferred tax assets will be realized for federal and U.S. states, except California, and therefore recorded a net valuation allowance release of million. As a result, the Company continued to maintain a full valuation allowance against the net deferred tax assets relating to the states of California and for the R&D credit carry forwards for the state of Massachusetts.

’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. As of in part because in the current year, the Company achieved years of cumulative pre-tax income in the U.S. federal tax jurisdiction, management determined that sufficient positive evidence exists as of to conclude that it is more likely than that deferred taxes of  million are realizable, and therefore, reduced the valuation allowance accordingly.

December 31, 2017,

$34.7

$20.8

ing loss carryforwards, if utilized will generally begin to expire in through At December the Company had research and development tax credits available to offset federal, California and Massachusetts tax liabilities in the amount of million,  million and  million, respectively. Federal credits will begin to expire in  California state tax credits have expiration, and Massachusetts tax credits begin to expire in

may

382

383

r uncertain tax positions based on the largest amount that is more-likely-than- to be sustained. An uncertain income tax position will be recognized if it has less than a likelihood of being sustained. The Company performs a -step approach to recognizing and measuring uncertain tax positions

. The step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The step is to measure the tax benefit as the largest amount that is more than likely of being realized upon settlement. Although the Company believes it has adequately reserved for its uncertain tax positions, assurance can be given that the final tax outcome of these matters will be different. The Company adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties.

ions. The through tax years generally remain subject to examination by U.S. federal and California state tax authorities due to the Company’s net operating loss and credit carryforwards. For significant foreign jurisdictions, the through tax years generally remain subject to examination by their respective tax authorities.

December

201

and in thousands):

 

It is the Company

December 22, 2017,

2017

“2017

2017

not

35%

21%;

one

December 31, 2017;

x

’s compensation limitation.

December 2017,

No.

118

118”

one

2017

2017

2017

21%

may

2017

not

2017

ASC requires companies to recognize the effect of tax law changes in the period of enactment, accordingly the effects must be recognized on companies’ calendar year-end financial statements, even though the effective date for most provisions is As a result the Company re-measured its net U.S. deferred tax assets at the future tax rate recorded a net decrease of approximately million.

At according to the Tax Act for estimating the Company's foreign undistributed earnings, the Company estimated an aggregate deficit in "accumulated earnings and profits," which is how foreign undistributed earnings are determined for the -time transition tax and for U.S. income tax purposes. The deficit was primarily a result of stock option exercises by foreign employees, which exceeded current year and prior year foreign earnings. As a result, the -time transition tax did have a significant impact on the Company’s tax provision and there was undistributed accumulated earnings and profits as of

ate does include foreign taxes on undistributed profits of foreign subsidiaries. These earnings could become subject to incremental foreign withholding, should these earnings be actually remitted to the U.S. The Company's future effective tax rates could be adversely affected by earnings being lower in countries where the Company has lower statutory rates and being higher in countries where the Company has higher statutory rates, or by changes in tax laws, accounting principles, interpretations thereof, and due to changes in the valuation allowance of the Company's U.S. deferred tax assets.

considered the impact of the Act on its need for valuation allowance assessment. The Company’s ASC - assertion remains unchanged and continues to assert that it will indefinitely reinvest its undistributed earnings.