|12 Months Ended|
Dec. 31, 2021
|Income Tax Disclosure [Abstract]|
|Income Taxes||Income Taxes
Subsequent to the issuance of the Company's Form 10-K for the year ended December 31, 2020, the Company identified certain disclosure misstatements in its 2020 income taxes footnote, the majority of which related to accounting for the tax consequences of various aspects of the SPAC merger. The misstatements impacted the effective income tax rate reconciliation, the composition of deferred tax assets and liabilities, disclosure of the aggregate changes in the balance of gross unrecognized tax benefits, and certain related narrative disclosures. The misstatements had no impact to the consolidated balance sheet as of December 31, 2020 or the consolidated statements of operations or cash flows for the year then ended because the misstatements were completely offset by a corresponding misstatement of the Company’s valuation allowance. For comparative purposes below, the Company’s comparable 2020 income tax provision disclosures have been revised to reflect the correction of these misstatements.
The components of the provision for income taxes consisted of the following (in thousands):
The reconciliation of taxes at the statutory rate to our provision for income taxes was as follows (in thousands):
Deferred tax assets and liabilities consisted of the following (in thousands):
The Company recorded a full valuation allowance against its deferred income tax assets at December 31, 2021 and 2020. Based upon management’s assessment of all available evidence, the Company has concluded that it is more likely than not that the net deferred income tax assets will not be realized. The increase in the valuation allowance for the years
ended December 31, 2021 and 2020 was $103.4 million and $40.1 million, respectively. The following table summarizes the activity recorded in the valuation allowance on the deferred income tax assets (in thousands):
At December 31, 2021, we had federal net operating loss carryforwards of approximately $585.7 million and state net operating loss carryforwards of $601.9 million that may be carried forward indefinitely for federal income tax purposes and can offset 80% of taxable income in any given year except as amended by the CARES Act. NOL's can be carried forward to offset future taxable income for a period of twenty years for California state income tax purposes.
The Company has research and development tax credits at December 31, 2021 and 2020 of approximately $12.9 million and $7.7 million, respectively, for both federal and state income tax purposes. If not utilized, the federal research and development tax credits will expire in various amounts beginning in 2039. State research and development credits can be carried forward indefinitely.
Future utilization of the net operating loss carryforwards and tax-credit carryforwards may be subject to an annual limitation based on changes in ownership, as defined by Section 382 of the Internal Revenue Code.
The aggregate changes in the balance of gross unrecognized tax benefits during the years ended December 31, 2021 and 2020 were as follows (in thousands):
As of December 31, 2021, the Company has total uncertain tax positions of $(40.3) million primarily related to research and development costs and tax basis in certain intangible assets which are recorded as a reduction of the deferred tax assets related to the research and development carryforwards and intangible assets. The Company's policy is to recognize interest and penalties, if any, related to uncertain tax positions as a component of income tax expense. For the years ended December 31, 2021 and 2020, the Company did not recognize any interest or penalties for uncertain tax positions. The Company is currently not under examination by the United States Internal Revenue Service or any other state, city, or local jurisdiction. The Company is subject to the standard statutes of limitations by the relevant tax authorities for federal and state purposes and all tax years since inception are open for examination.
The Company does not anticipate any significant increases or decreases in its unrecognized tax benefits within the next twelve months.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef