Achieve Life Sciences, Inc. Annual report pursuant to Section 13 and 15(d)

Income Tax (Tables)

12 Months Ended

Dec. 31, 2015

(In thousands)	2015			2014			2013
Income taxes at statutory rates (at a rate of 34% for all periods presented)	$	(5,712	)	$	(8,922	)	$	(10,829	)
Expenses not deducted for tax purposes		(14	)		(452	)		(738	)
Effect of tax rate changes on deferred tax assets and liabilities		(13	)		(9	)		(744	)
Rate differential on foreign earnings		689			1,445			2,003
Reduction (increase) in benefit of operating losses		(32	)		441			(10	)
Reduction in the benefit of other tax attributes		—			—			-
Investment tax credits		(297	)		(357	)		(347	)
Change in valuation allowance		5,114			7,854			10,538
Book to tax return adjustments		265			—			127
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):

	2015			2014
Deferred tax assets:
Tax basis in excess of book value of assets	$	6,308		$	4,871
Non-capital loss carryforwards		77,746			76,403
Research and development deductions and credits		7,484			7,464
Stock options		3,448			3,163
Restructuring liability		474			(25	)
Other		1,627			110
Total deferred tax assets		97,087			91,986
Valuation allowance	$	(97,087	)	$	(91,986	)

A reconciliation of the unrecognized tax benefits of uncertain tax positions for the year ended December 31, 2015 is as follows (in thousands):

	Year ended
	December 31,
	2015		2014		2013
Balance at January 1	$	2,039	$	2,007	$	1,967
Additions based on tax positions related to the current year		16		32		32
Additions based on tax positions related to prior years		-		-		8
Balance at December 31	$	2,055	$	2,039	$	2,007

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