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

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

The provision for income taxes consists of the following:

	Years ended December 31,
(amounts in thousands)	2016			2015			2014
Current tax expense (benefit)
Federal	$	451		$	(140	)	$	1,139
State		776			102			525
Total current tax expense (benefit)		1,227			(38	)		1,664
Deferred tax expense
Federal		1,357			3,639			2,782
State		590			705			3
Total deferred tax expense		1,947			4,344			2,785
Tax benefit for change in valuation allowance		(968	)		(1,164	)		(1,223	)
Total deferred tax expense, net		979			3,180			1,562
Income tax expense	$	2,206		$	3,142		$	3,226

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

	As of
	December 31,
(amounts in thousands)	2016			2015
Deferred tax assets (liabilities)
Accrued expenses	$	6,199		$	4,031
Net operating loss and credit carryforward		16,505			11,874
Allowance, reserves and other		8,690			6,527
Stock-based compensation		2,378			982
Deferred tax assets		33,772			23,414
Valuation allowance		(767	)		(1,735	)
Net deferred tax assets		33,005			21,679
Property, plant, and equipment		(6,351	)		(6,215	)
Total	$	26,654		$	15,464

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,
	2016			2015			2014
U.S. Statutory rate		34.00	%		34.00	%		34.00	%
State income taxes, net of federal benefit		0.88			2.00			2.47
Nondeductible expenses		0.11			0.16			0.11
Stock-based compensation		(23.74	)		0.65			1.28
Remeasured deferred for state rate change		0.09			(0.03	)		(0.25	)
Change in valuation allowance		(4.26	)		(7.91	)		(12.16	)
R&D credit, net of reserve		(1.75	)		(2.97	)		(3.49	)
Expiration of net operating losses		4.51			1.17			8.09
Reassessment of prior year APIC benefit		—			(3.11	)		—
Other		(0.13	)		(2.63	)		2.04
Effective income tax rate		9.71	%		21.33	%		32.09	%

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

	December 31,
(amounts in thousands)	2016		2015		2014
Reconciliation of liability for unrecognized tax benefits
Balance at beginning of period	$	773	$	577	$	306
Additions based on tax positions related to current year		161		176		123
Additions for tax positions of prior years		—		20		148
Reductions for tax positions of prior years		—		—		—
Settlements		—		—		—
Balance at end of period	$	934	$	773	$	577