Note 18. Income taxes A reconciliation of the expected income tax benefit computed using the federal statutory income tax rate of 21% to the Company’s effective income tax rate is as follows (in thousands): Years Ended December 31, 2021 2020 Federal tax benefit at statutory rate $ (25,772) $ (19,162) State tax benefit, net of federal benefit (4,422) (4,375) Research and development and orphan drug credits (350) (480) Uncertain tax positions (302) (16) Permanent adjustments to expenses 1,779 710 Stock-based compensation 901 1,014 Return to provision adjustment (2,450) (1,203) Statutory tax rate differential 663 — Changes in valuation allowance 29,642 23,543 Other 311 (141) Total income tax benefit $ — $ (110) The benefit for income taxes for 2020 is attributable to an Australian research and development tax incentive that was refunded to the Company based on the 2020 income tax filing. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is required to be established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The guidance on accounting for income taxes provides important factors in determining whether a deferred tax asset will be realized, including whether there has been sufficient taxable income in recent years and whether sufficient income can reasonably be expected in future years in order to utilize the deferred tax asset. For the years ended December 31, 2021 and 2020, the Company evaluated the need to maintain a valuation allowance for deferred tax assets based on our assessment of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): December 31, 2021 2020 Deferred tax assets: Net operating losses $ 100,790 $ 74,894 Federal research and orphan drug credits 7,184 8,362 Stock-based compensation 3,177 1,894 Other temporary differences 27,094 7,785 Valuation allowance (137,881) (92,493) Total assets 364 442 Deferred tax liabilities: Fixed and intangible assets (197) (404) Other deferred tax liabilities (5,109) (38) Total liabilities (5,306) (442) Net deferred tax liabilities $ (4,942) $ — As of December 31, 2021, the Company had federal net operating loss carryforwards of $475.7 million and various state net operating loss carryforwards of $309.7 million. As of December 31, 2020, the Company had federal net operating loss carryforwards of $284.8 XERIS BIOPHARMA HOLDINGS, INC. Notes to Consolidated Financial Statements 121
RkJQdWJsaXNoZXIy NTIzOTM0