|12 Months Ended
Dec. 31, 2016
|Income Tax Disclosure [Abstract]
13. Income Taxes
Net loss before tax provision consists of the following (in thousands):
The components of the provision for income tax expense consist of the following for the periods indicated (in thousands):
Reconciliation of the statutory federal income tax rates consist of the following for the periods indicated:
The components of deferred tax assets (liabilities) included on the consolidated balance sheet are as follows (in thousands):
Based on the available objective evidence at this time, management believes that it is more likely than not that the deferred tax assets of the Company will not be fully realized. Accordingly, management has applied a full valuation allowance against net deferred tax assets at both December 31, 2016 and December 31, 2015.
The Company has Federal and California net operating loss carry-forwards of approximately $4.9 million and $1.8 million, respectively, available to reduce future taxable income which will begin to expire in December 31, 2034 for Federal and California purposes.
At December 31, 2015, the Company had research and development credits carryforward of approximately $59,000 and $186,000 for Federal and California income tax purposes, respectively. If not utilized, the Federal research and development credits carryforward will begin to expire in December 31, 2034. The California credits can be carried forward indefinitely.
Utilization of the Company's net operating loss may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of net operating loss carryforwards prior to utilization.
The Company’s policy is to account for interest and penalties as income tax expense. As of December 31, 2016, the Company had no interest related to unrecognized tax benefits. No amounts of penalties related to unrecognized tax benefits were recognized in the provision for income taxes.
The Company maintains liabilities for uncertain tax positions. These liabilities involve considerable judgement and estimation and are continuously monitored by management based on the best information available, including changes in tax regulations, the outcome of relevant court cases, and other information. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits as income tax expense. At December 31, 2016, the Company’s total amount of unrecognized tax benefit was approximately $73,000, none of which will affect the effective tax rate, if recognized. The Company does not expect its unrecognized benefits to change materially over the next twelve months.
The Company files income tax returns with the United States federal government and the State of California. The Company’s tax returns for the prior years remain open to audit for Federal and California purposes.
The Company is making the election to early adopt ASU 2015-17 to classify all deferred tax assets and liabilities, along with any related valuation allowance, as noncurrent on the balance sheet.