Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.6.0.2
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
Schedule of the components of income tax benefit
The components of the income tax expense (benefit) for continuing operations are as follows (in thousands):
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
Current expense (benefit):
 
 
 
 
 
 
Federal
$
21

 
$
11

 
$
15

 
State
12

 
7

 
19

 
 
33

 
18

 
34

 
Deferred expense (benefit):
 
 
 
 
 
 
Federal
10,534

 
(167,413
)
 
406

 
State
(240
)
 
(24,720
)
 
(30
)
 
 
$
10,327

 
$
(192,115
)
 
$
410

 
Schedule of deferred tax assets and liabilities
Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2016 and 2015 are shown below. The Company assesses the positive and negative evidence to determine if sufficient future taxable income will be generated to use the existing deferred tax assets. The Company's evaluation of evidence resulted in management concluding that the majority of the Company's deferred tax assets will be realized. However, the Company maintains a valuation allowance to offset certain net deferred tax assets as management believes realization of such assets are uncertain as of December 31, 2016, 2015 and 2014. The valuation allowance increased $6.3 million in 2016, decreased $231.7 million in 2015 and decreased $7.2 million in 2014.
 
December 31,
 
2016
 
2015
 
(in thousands)
Deferred assets:
 
 
 
Net operating loss carryforwards
$
150,226

 
$
160,595

Research credit carryforwards
26,878

 
25,613

Fixed assets and intangibles
4,385

 
8,839

Accrued expenses
943

 
1,523

Contingent liabilities
578

 
707

Deferred revenue

 
3

Present value of royalties
591

 
3,007

Deferred rent
45

 
68

Capital Loss Carryforward
4,432

 

Viking Equity Method Investment
5,692

 
1,840

Other
19,312

 
15,441

 
213,082

 
217,636

Valuation allowance for deferred tax assets
(15,349
)
 
(9,066
)
Net deferred tax assets
$
197,733

 
$
208,570

Deferred tax liabilities:
 
 
 
Retrophin fair value adjustment
$
(52
)
 
$
(1,256
)
Convertible debt
(1,196
)
 
(1,844
)
Identified intangibles
(68,631
)
 
(12,770
)
Identified indefinite lived intangibles
(3,963
)
 
(3,617
)
Total
$
123,891

 
$
189,083

Schedule of effective income tax rate reconciliation
A reconciliation of income tax expense (benefit) from continuing operations to the amount computed by applying the statutory federal income tax rate to the net income (loss) from continuing operations is summarized as follows:
 
 
Year Ended December 31,
 
2016
 
2015
 
2014
Amounts computed at statutory federal rate
$
2,786

 
$
13,198

 
$
3,843

State taxes net of federal benefit
175

 
386

 
697

Meals & entertainment
16

 
16

 
9

Imputed interest
(1
)
 
(161
)
 
53

Section 162(m) limitation
94

 
197

 
490

Contingent liabilities
1,225

 
1,684

 
1,748

Stock-based compensation
263

 
140

 
89

Expired NOLs

 
232

 
88

Research and development credits
(1,525
)
 
304

 
(113
)
Change in uncertain tax positions
1,423

 
27,188

 
7

Rate change for changes in state law
25

 
(5,756
)
 
119

APIC Excess Tax Benefit True Up

(622
)
 

 

Increase in deferred tax assets from completion of 382 analysis
(120
)
 
3,329

 
43

Avinza true up


(2,107
)


Change in valuation allowance
6,283

 
(231,370
)
 
(7,243
)
Other
305

 
605

 
580

 
$
10,327

 
$
(192,115
)
 
$
410

Schedule of unrecognized tax benefits
A reconciliation of the amount of unrecognized tax benefits at December 31, 2016, 2015 and 2014 is as follows (in thousands):
 
December 31,
 
2016
 
2015
 
2014
Balance at beginning of year
$
36,452

 
$
8,524

 
$
8,504

     Additions based on tax positions related to the current year
70

 
154

 
40

     Additions for tax positions of prior years
2,408

 
28,224

 

     Reductions for tax positions of prior years
(160
)
 
(450
)
 
(20
)
Balance at end of year
$
38,770

 
$
36,452

 
$
8,524