Inogen, Inc. Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

The provision (benefit) for income taxes consists of the following:

	Years ended December 31,
(amounts in thousands)	2015			2014			2013
Current tax expense (benefit)
Federal	$	(140	)	$	1,139		$	42
State		102			525			169
Total current tax expense (benefit)		(38	)		1,664			211
Deferred tax expense (benefit)
Federal		3,639			2,782			798
State		705			3			313
Total deferred tax expense		4,344			2,785			1,111
Tax benefit for change in valuation allowance		(1,164	)		(1,223	)		(22,909	)
Total deferred tax expense (benefit), net		3,180			1,562			(21,798	)
Income tax expense (benefit)	$	3,142		$	3,226		$	(21,587	)

The components of deferred tax assets and liabilities consist of the following:

	As of
	December 31,
(amounts in thousands)	2015			2014
Deferred tax assets (liabilities)
Accrued expenses	$	4,031		$	3,575
Net operating loss and credit carryforward		11,874			22,924
Allowance, reserves and other		7,509			1,965
Deferred tax assets		23,414			28,464
Valuation allowance		(1,735	)		(2,899	)
Net deferred tax assets		21,679			25,565
Property, plant, and equipment		(6,215	)		(3,674	)
Other		—			(1,667	)
Total	$	15,464		$	20,224

Reconciliation of the federal statutory income tax rate to the effective income tax rate for the last three years is as follows:

	Years ended December 31,
	2015			2014			2013
U.S. Statutory rate		34.00	%		34.00	%		34.00	%
State income taxes, net of federal benefit		2.00			2.47			5.48
Nondeductible expenses		0.81			1.39			2.54
Remeasured deferred for state rate change		(0.03	)		(0.25	)		(8.25	)
Change in valuation allowance		(7.91	)		(12.16	)		(595.34	)
R&D credit, net of reserve		(2.97	)		(3.49	)		—
Expiration of net operating losses		1.17			8.09			—
Reassessment of prior year APIC benefit		(3.11	)		—			—
Other		(2.63	)		2.04			0.58
Effective income tax rate		21.33	%		32.09	%	(560.99		)%

A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

	December 31,
(amounts in thousands)	2015		2014		2013
Reconciliation of liability for unrecognized tax benefits
Balance at beginning of period	$	577	$	306	$	—
Additions based on tax positions related to current year		176		123		306
Additions for tax positions of prior years		20		148		—
Reductions for tax positions of prior years		—		—		—
Settlements		—		—		—
Balance at end of period	$	773	$	577	$	306