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

Income Tax (Tables)

12 Months Ended

Dec. 31, 2013


(In thousands)	2013			2012			2011
Income taxes at statutory rates (at a rate of 34% for all periods presented)	$	(10,829	)	$	(7,152	)	$	(4,989	)
Expenses not deducted for tax purposes		(738	)		(1,212	)		(2,366	)
Effect of tax rate changes on deferred tax assets and liabilities		(744	)		—			—
Rate differential on foreign earnings		2,003			1,672			1,326
Reduction (increase) in benefit of operating losses		(10	)		15			16
Reduction in the benefit of other tax attributes		—			551			468
Investment tax credits		(347	)		(485	)		(588	)
Change in valuation allowance		10,538			6,324			6,175
Book to tax return adjustments		127			287			(42	)
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):


	2013			2012
Deferred tax assets:
Tax basis in excess of book value of assets	$	951		$	930
Non-capital loss carryforwards		72,115			62,489
Research and development deductions and credits		6,857			6,212
Stock options		2,578			2,077
Capital loss carryforward		—			51
Restructuring liability		1,567			1,799
Other		70			51

Total deferred tax assets		84,138			73,609
Valuation allowance	$	(84,138	)	$	(73,609	)

A reconciliation of the unrecognized tax benefits of uncertain tax positions for the year ended December 31, 2013 is as follows (in thousands):


	Year ended December 31,
	2013		2012
Balance at January 1	$	1,967	$	1,936
Additions based on tax positions related to the current year		32		55
Additions based on tax positions related to prior years		8		—
Deductions based on tax positions related to the current year		—		(24	)

Balance at December 31	$	2,007	$	1,967

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