Entity information:
INCOME TAXES
The following table summarizes the income (loss) before income tax (benefit) expense:
 
 
Year Ended 
 December 31,
 
 
2017
 
2016
 
2015
United States
 
$
(39,088
)
 
$
(29,885
)
 
$
(28,830
)
Foreign
 
469

 
(11,701
)
 
(10,194
)
Total
 
$
(38,619
)
 
$
(41,586
)
 
$
(39,024
)

The income taxes (benefit) expense is as follows:
 
 
Year Ended 
 December 31,
 
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
 
Federal
 
$
—

 
$
—

 
$
—

State
 
163

 
106

 
166

Foreign
 
20

 
(8
)
 
26

Deferred:
 
 
 
 
 
 
Federal
 
808

 
(6,572
)
 
(10,179
)
State
 
(4,039
)
 
(772
)
 
(963
)
Foreign
 
(2,034
)
 
(1,273
)
 
(536
)
Change in valuation allowance
 
3,608

 
8,593

 
11,678

Income taxes (benefit) expense
 
$
(1,474
)
 
$
74

 
$
192


The following table summarizes net deferred liability which consists of the following:
 
 
December 31,
 
 
2017
 
2016
Net operating losses
 
$
42,703

 
$
38,234

Capital lease obligations
 
9,096

 
13,600

Income tax credits
 
3,647

 
3,030

Inventory
 
6,710

 
8,080

Stock-based compensation
 
3,249

 
4,668

Intellectual property agreements
 
2,420

 
3,123

Other deferred temporary differences
 
1,070

 
3,055

    Deferred tax assets
 
68,895

 
73,790

    Valuation allowance
 
(58,831
)
 
(55,223
)
Total deferred tax assets, net of valuation allowance
 
10,064

 
18,567

Capital lease assets
 
(7,655
)
 
(11,949
)
Intangible assets
 
(3,406
)
 
(7,472
)
Discount on convertible notes
 
(2,363
)
 
(4,163
)
    Deferred tax liability
 
(13,424
)
 
(23,584
)
Net deferred tax liability
 
$
(3,360
)
 
$
(5,017
)

Approximately $10,582 of the net operating losses (“NOL”) for the year ended December 31, 2017, is related to operations outside the United States and will begin to expire in 2019. The NOL of $32,121 related to operations in the United States begins to expire in 2030. Tax credits of $3,647 begin to expire in 2027. Under Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), certain significant changes in ownership may restrict the future utilization of our NOL and tax credits.
The following table summarizes a reconciliation of the U.S. statutory federal income tax rate to our effective tax rate, as a percentage of loss before income tax benefit (expense) for the years ended December 31, 2017, 2016 and 2015:
 
 
Year Ended 
 December 31,
 
 
2017
 
2016
 
2015
Federal tax at statutory rates
 
34.0
 %
 
34.0
 %
 
34.0
 %
State taxes, net of federal benefit
 
3.9

 
2.1

 
1.9

Tax credits
 
1.6

 
1.4

 
1.2

Permanent difference
 
2.3

 
(0.6
)
 
(0.9
)
Foreign income taxes
 
0.2

 
(2.9
)
 
(2.2
)
Change in valuation allowance
 
(59.7
)
 
(30.7
)
 
(29.9
)
Effect of statutory tax rate change
 
4.3

 
(1.4
)
 
(1.2
)
Adjustment to net operating loss deferred tax asset
 
13.0

 
—

 
—

Other adjustments
 
4.2

 
(2.1
)
 
(3.4
)
Income tax benefit (expense)
 
3.8
 %
 
(0.2
)%
 
(0.5
)%

The effective tax rate differs from the statutory rate due to minimum income taxes, permanent differences and changes in valuation allowances. The provision for income taxes for the years ended December 31, 2017, 2016 and 2015 includes both domestic and foreign minimum income taxes and changes in the valuation allowance.
On December 22, 2017, The Tax Cuts and Jobs Act (H.R.1) was enacted, impacting taxpayers in the United States. Among other changes, the federal corporate tax rate was reduced to 21%. As a result of this change, our domestic deferred tax assets and liabilities are reported at December 31, 2017 using the newly enacted federal corporate rate. During the periods ended December 31, 2016 and 2015, the impact of tax rate changes on our effective tax rate were aggregated with other nominal items and reported as one line item. Due to the material impact of the federal corporate tax rate change, we now report tax rate changes on a separate line item. The above table reflects this change for the years ended December 31, 2017, 2016 and 2015.
The following reflects a rollforward of the deferred tax asset valuation allowance for the years ended December 31, 2017, 2016 and 2015:
 
 
Year Ended 
 December 31,
 
 
2017
 
2016
 
2015
Beginning
 
$
(55,223
)
 
$
(46,630
)
 
$
(34,952
)
Increase to allowance
 
(3,608
)
 
(8,593
)
 
(11,678
)
Ending
 
$
(58,831
)
 
$
(55,223
)
 
$
(46,630
)

We are subject to income taxes in the United States and certain foreign jurisdictions. Significant judgment is required in determining the consolidated provision for income taxes and recording the related deferred tax assets and liabilities. In the ordinary course of business, there are transactions and calculations where the ultimate tax determination is uncertain.
As of December 31, 2017 and 2016, we did not have uncertain tax positions. Our tax returns are currently under examination in Germany and Italy. We are subject to income tax examinations in the U.S. and in certain foreign jurisdictions beginning in 2011 and 2014, respectively. Although we believe that the estimates and assumptions supporting our tax positions are reasonable, the final determination of tax audits and any related litigation could be materially different from that which is reflected in historical income tax provisions and recorded assets and liabilities. Based on the results of an audit or litigation, there could be a material effect on our benefit from income taxes, net loss or cash flows in the period or periods for which that determination is made.
In 2017, we adopted ASU 2016-09. This ASU required the tax effects of share-based compensation to be reflected in the statement of operations instead of the balance sheet. This guidance is effective for periods beginning after December 15, 2016. Prior to 2017, we made annual adjustments to certain net operating loss deferred tax assets. As a result of this election, we have reversed these adjustments resulting in larger recognized net operating loss deferred tax assets, which are offset fully by a valuation allowance.