Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.10.0.1
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Schedule of 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,
  2018 2017 2016
Current expense (benefit):
Federal $ —  $ —  $ 21 
State 424  111  12 
Foreign (158) 261  — 
266  372  33 
Deferred expense (benefit):
Federal 29,928  44,075  10,534 
State (185) 228  (240)
Foreign —  —  — 
$ 30,009  $ 44,675  $ 10,327 
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 (in thousands):
 
  Year Ended December 31,
  2018 2017 2016
Tax at federal statutory rate $ 36,400  $ 20,031  $ 2,786 
State, net of federal benefit 1,635  622  175 
Contingent liabilities 948  903  1,225 
Share-based compensation (8,131) (4,019) 263 
Research and development credits (2,758) (2,821) (1,525)
Change in uncertain tax positions 858  1,308  1,423 
Rate change for changes in federal or state law 178  32,429  25 
Change in valuation allowance (4,225) (4,169) 6,283 
Expired NOLs and credits 3,054  —  — 
Change in derivatives 615  —  — 
Other 1,435  391  (328)
$ 30,009  $ 44,675  $ 10,327 
Schedule of Deferred Tax Assets and Liabilities Significant components of our deferred tax assets and liabilities as of December 31, 2018 and 2017 are shown below. We assess the positive and negative evidence to determine if sufficient future taxable income will be generated to use the existing deferred tax assets. Our evaluation of evidence resulted in management concluding that the majority of our deferred tax assets will be realized. However, we maintain a valuation allowance to offset certain net deferred tax assets as management believes realization of such assets are uncertain as of December 31, 2018, 2017 and 2016. The valuation allowance decreased $2.5 million in 2018, decreased $8.4 million in 2017 and increased $6.3 million in 2016.
  December 31,
  2018 2017
  (in thousands)
Deferred tax assets:
Net operating loss carryforwards $ 57,181  $ 90,272 
Research credit carryforwards 31,101  30,677 
Fixed assets and intangibles 1,637  1,984 
Accrued expenses 657  845 
Deferred revenue 957  17 
Capital Loss Carryforward —  1,609 
Investment in Viking —  5,137 
Other 11,430  12,499 
102,963  143,040 
Valuation allowance for deferred tax assets (4,476) (6,987)
Net deferred tax assets $ 98,487  $ 136,053 
Deferred tax liabilities:
Retrophin fair value adjustment (179) (243)
Convertible debt (2,905) (737)
Identified intangibles (44,643) (48,237)
Identified indefinite lived intangibles (1,759) (2,414)
Investment in Viking (2,480) — 
Net deferred tax liabilities $ (51,966) $ (51,631)
Deferred income taxes, net $ 46,521  $ 84,422 
Schedule of Unrecognized Tax Benefits
A reconciliation of the amount of unrecognized tax benefits at December 31, 2018, 2017 and 2016 is as follows (in thousands):
December 31, 
2018 2017 2016
Balance at beginning of year $ 29,363  $ 38,770  $ 36,452 
Additions based on tax positions related to the current year 1,247  1,067  70 
Additions for tax positions of prior years 336  109  2,408 
Reductions for tax positions of prior years (657) (10,583) (160)
Balance at end of year $ 30,289  $ 29,363  $ 38,770