|3 Months Ended|
Mar. 31, 2021
Note 14. Income Taxes
The quarterly provision for or benefit from income taxes is based on applying the estimated annual effective tax rate to the year-to-date pre-tax income (loss), plus any discrete items. We update our estimate of our annual effective tax rate at the end of each quarterly period. The estimate considers annual forecasted income (loss) before income taxes and any significant permanent tax items.
For the three months ended March 31, 2021, we recorded provision for income tax of $1.8 million. The provision for income taxes for the three months ended March 31, 2021 was primarily related to state tax on our pre-tax book income. We estimated a state tax liability over our forecasted pre-tax income for 2021, primarily due to revenue recognized for the Lilly agreement. We do not expect to owe federal income taxes due to the sufficient net operating loss carryforwards that were generated prior to the enactment of the Tax Cuts and Jobs Act, as well as significant research and development credit carryforwards. Although we are projecting book income for 2021, we continue to record a full valuation allowance on our deferred tax assets considering our cumulative losses in prior years and forecasted losses in the future. For the three months ended March 31, 2020, we did not record provision for income taxes due to our pre-tax book loss.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef