12. INCOME TAXES
The (provision) benefit for income taxes for the years ended December 31 consists of:
|
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
|||
|
Current tax expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
State |
|
|
60 |
|
|
|
(47 |
) |
|
|
(29 |
) |
|
Total current tax (provision) benefit |
|
|
60 |
|
|
|
(47 |
) |
|
|
(29 |
) |
|
Deferred tax expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
|
— |
|
|
|
(3 |
) |
|
|
(3 |
) |
|
State |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
Total deferred tax (provision) benefit |
|
|
— |
|
|
|
(4 |
) |
|
|
(4 |
) |
|
Total (provision) benefit for income taxes |
|
$ |
60 |
|
|
$ |
(51 |
) |
|
$ |
(33 |
) |
The (provision) benefit for income taxes for the years ended December 31, 2016, 2015 and 2014 differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to the loss before (provision) benefit for income taxes as a result of the following:
|
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
|||
|
Federal statutory rate |
|
|
34.0 |
% |
|
|
34.0 |
% |
|
|
34.0 |
% |
|
Effect of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
State income taxes, net of federal benefit |
|
|
0.1 |
% |
|
|
(0.5 |
)% |
|
|
(0.2 |
)% |
|
Valuation allowance |
|
|
(35.3 |
)% |
|
|
(32.9 |
)% |
|
|
(33.7 |
)% |
|
Other, net |
|
|
1.4 |
% |
|
|
(1.3 |
)% |
|
|
(0.4 |
)% |
|
Overall income tax rate |
|
|
0.2 |
% |
|
|
(0.7 |
)% |
|
|
(0.3 |
)% |
Other, net primarily includes the impact of stock-based compensation and changes in net operating loss carry forward deferred tax assets as a result of change in state rates.
Deferred income taxes reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are comprised of the following as of December 31:
|
|
|
2016 |
|
|
2015 |
|
||
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
|
Net operating loss carryforward |
|
$ |
45,205 |
|
|
$ |
32,844 |
|
|
Deferred revenue |
|
|
12,199 |
|
|
|
17,576 |
|
|
Research and development credit |
|
|
45 |
|
|
|
45 |
|
|
Accrued payroll and related liabilities |
|
|
2,070 |
|
|
|
1,919 |
|
|
Other |
|
|
821 |
|
|
|
331 |
|
|
Valuation allowance |
|
|
(48,192 |
) |
|
|
(38,817 |
) |
|
Net deferred tax assets |
|
$ |
12,148 |
|
|
$ |
13,898 |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
|
Intangible assets |
|
$ |
(3,100 |
) |
|
$ |
(4,339 |
) |
|
Deferred implementation costs |
|
|
(9,070 |
) |
|
|
(9,581 |
) |
|
Total deferred tax liabilities |
|
|
(12,170 |
) |
|
|
(13,920 |
) |
|
Net deferred tax liability |
|
$ |
(22 |
) |
|
$ |
(22 |
) |
Based on the uncertainties associated with future realization of the deferred tax asset, the Company established a valuation allowance, which reduces the deferred tax assets to an amount whose realization is more likely than not. The net change in the valuation allowance for the deferred tax asset was $9,375, $2,397 and $(1,476) for the years ended December 31, 2016, 2015 and 2014, respectively. Differences between effective and statutory tax rates are caused substantially by the change in the valuation allowance.
As of December 31, 2016 and 2015, the Company has federal net operating loss carryforwards of approximately $121,000 and $87,920, respectively, available to offset future earnings and federal research and development credits of approximately $45, also available to offset future federal income tax. The net operating loss carryforwards and research and development tax credit carryforwards expire at various dates from 2020 through 2036. As of December 31, 2016 and 2015, state net operating loss carryforwards were approximately $77,800 and $56,451, respectively. As of December 31, 2016 and 2015, management has recorded a full valuation allowance against net operating losses because management believes it is more likely than not that some portion or all of these deferred tax assets will not be realized.
Under the provisions of the Internal Revenue Code (IRC), certain substantial changes in the Company’s ownership may result in a limitation of the amount of net operating loss and tax credit carryforwards which can be used in future years.
The Company has recorded no liability for unrecognized tax benefits and related interest and penalties as of December 31, 2016 and 2015.
The Company files income tax returns in the US federal tax jurisdiction and various state jurisdictions. The federal tax years for 2014 through 2016 remain open for examination. State tax years open for examination are generally 2013 through 2016, depending on the state.