Achieve Life Sciences, Inc. Registration of securities issued in business combination transactions

Income Tax (Tables)

12 Months Ended

Dec. 31, 2016


(In thousands)	2016			2015			2014
Income taxes at statutory rates (at a rate of 34% for all periods presented)	$	(6,844	)	$	(5,712	)	$	(8,922	)
Expenses not deducted for tax purposes		(67	)		(14	)		(452	)
Effect of tax rate changes on deferred tax assets and liabilities		(3	)		(13	)		(9	)
Rate differential on foreign earnings		972			689			1,445
Reduction (increase) in benefit of operating losses		196			(32	)		441
Reduction in the benefit of other tax attributes		—			—			—
Investment tax credits		(252	)		(297	)		(357	)
Change in valuation allowance		6,203			5,114			7,854
Book to tax return adjustments		(205	)		265			—
Other					—			—

Income tax expense	$	—		$	—		$	—

The investment tax credits and non-capital losses and net operating losses for income tax purposes expire as follows (in thousands):

Significant components of our deferred tax assets as of December 31 are shown below (in thousands):


	2016			2015
Deferred tax assets:
Tax basis in excess of book value of assets	$	6,483		$	6,308
Non-capital loss carryforwards		84,358			77,746
Research and development deductions and credits		7,969			7,484
Stock options		3,743			3,448
Restructuring liability		624			474
Other		112			1,627

Total deferred tax assets		103,289			97,087
Valuation allowance	$	(103,289	)	$	(97,087	)
Net deferred tax assets		—			—

A reconciliation of the unrecognized tax benefits of uncertain tax positions for the year ended December 31, 2016 is as follows (in thousands):


			Year ended December 31,
	2016		2015		2014
Balance at January 1	$	2,055	$	2,039	$	2,007
Additions based on tax positions related to the current year		16		16		32
Additions based on tax positions related to prior years		—		—		—

Balance at December 31	$	2,071	$	2,055	$	2,039

Tax audits by their very nature are often complex and can require several years to complete.