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Note 16 - Income Taxes | 12 Months Ended
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Jul. 31, 2021
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE 16: INCOME TAXES As at July 31, 2021, we had U.S. net operating loss carry-forwards of approximately $173.0 million and Canadian net operating loss carry-forwards of approximately $4.9 million in Canadian dollars that may be available to reduce future years' taxable income. These carry-forwards will begin to expire, if not utilized, commencing in 2023. In addition, as at July 31, 2021, we had U.S. net operating loss totaling $51.3 million and interest expenses of $4.9 million subject to IRC section 163 (j) limitation, which will be carried forward indefinitely as a result of the Tax Cut and Jobs Act enacted on December 22, 2017. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization has been determined not likely to occur and, accordingly, we have recorded a full valuation allowance for the deferred tax assets relating to these tax loss carry-forwards. We review the valuation allowance requirements on an annual basis based on projected future operations. When circumstances change resulting in a change in management's judgement about the recoverability of deferred tax assets, the impact of the change on the valuation allowance will generally be reflected in current income. A reconciliation of income tax computed at the federal and state statutory tax rates including the Company's effective tax rate is as follows:
|  | Year Ended July 31, |
|  | 2021 |  |  | 2020 |
Federal income tax provision rate |  |  | 21.00 | % |  |  | 21.00 | %
State income tax provision rate, net of federal income tax effect |  |  | 0.83 | % |  |  | 0.72 | %
Total income tax provision rate |  |  | 21.83 | % |  |  | 21.72 | %
The actual income tax provisions differ from the expected amounts calculated by applying the combined federal and state corporate income tax rates to our loss before income taxes. The components of these differences are as follows:
|  | Year Ended July 31, |
|  | 2021 |  |  | 2020 |
Loss before income taxes |  | $ | (14,817,818 | ) |  | $ | (14,616,067 | )
Corporate tax rate |  |  | 21.83 | % |  |  | 21.72 | %
Expected tax recovery |  |  | (3,234,730 | ) |  |  | (3,174,610 | )
Increase (decrease) resulting from |  |  |  |  |  |  |  |
Foreign tax rate differences |  |  | 77,454 |  |  |  | 85,796 |
Permanent differences |  |  | (217,615 | ) |  |  | 170,023 |
Prior year true-up |  |  | (270,078 | ) |  |  | 117,800 |
Change in state tax rate |  |  | (405,826 | ) |  |  | (553,365 | )
Foreign exchange rate differences |  |  | (55,666 | ) |  |  | 17,456 |
Other |  |  | 162,812 |  |  |  | 71,805 |
Change in valuation allowance |  |  | 3,939,641 |  |  |  | 3,233,427 |
Tax adjustment from operations |  |  | (4,008 | ) |  |  | (31,668 | )
Unrealized loss, other comprehensive loss |  |  | - |  |  |  | 26,117 |
Deferred tax benefits |  | $ | (4,008 | ) |  | $ | (5,551 | )
We have incurred taxable losses for all years since inception and, accordingly, no provision for current income tax has been recorded for the current or any prior fiscal years. During Fiscal 2021 and Fiscal 2020, we recorded deferred tax benefits of $4,008 and $5,551, respectively. As at July 31, 2021, we re-evaluated the realizability of our tax loss carry-forwards and our conclusion that the realization of these tax loss carry-forwards is not likely to occur remains unchanged. As a result, we will continue to record a full valuation allowance for the deferred tax assets relating to the remaining tax loss carry-forwards. The components of income (loss) from operations before income taxes, by tax jurisdiction, are as follows:
|  | Year Ended July 31, |
|  | 2021 |  |  | 2020 |
United States |  | $ | (14,297,315 | ) |  | $ | (13,962,287 | )
Canada |  |  | 93,402 |  |  |  | 53,960 |
Paraguay |  |  | (613,905 | ) |  |  | (707,740 | )
|  | $ | (14,817,818 | ) |  | $ | (14,616,067 | )
The Company's deferred tax assets (liabilities) are as follows:
|  | July 31, 2021 |  |  | July 31, 2020 |
Deferred tax assets (liabilities) |  |  |  |  |  |  |  |
Mineral properties |  | $ | 1,277,053 |  |  | $ | 1,270,292 |
Exploration costs |  |  | 6,546,397 |  |  |  | 6,384,265 |
Stock option expense |  |  | 4,623,357 |  |  |  | 4,594,159 |
Depreciable property |  |  | (1,163,533 | ) |  |  | (1,157,934 | )
Inventories |  |  | (3,607,772 | ) |  |  | (3,550,814 | )
Asset retirement obligations |  |  | 107,499 |  |  |  | 62,626 |
Other |  |  | 80,834 |  |  |  | 58,559 |
Section 163(j) interest expense carry forwards |  |  | 1,061,263 |  |  |  | 733,343 |
Loss carry forwards |  |  | 49,987,843 |  |  |  | 46,552,687 |
|  |  | 58,912,941 |  |  |  | 54,947,183 |
Valuation allowance |  |  | (58,912,941 | ) |  |  | (54,973,300 | )
Deferred tax assets |  |  | - |  |  |  | (26,117 | )
Deferred tax assets, other comprehensive loss |  |  | - |  |  |  | 26,117 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Mineral properties |  |  | (540,992 | ) |  |  | (545,000 | )
Net deferred tax liabilities |  | $ | (540,992 | ) |  | $ | (545,000 | )
As the criteria for recognizing deferred tax assets have not been met due to the uncertainty of realization, a valuation allowance of 100% has been recorded for the current and prior years. The Company's U.S. net operating loss carry-forwards expire as follows:
July 31, 2023 |  | $ | 180,892 |
July 31, 2024 |  |  | 228,757 |
July 31, 2025 |  |  | 507,833 |
July 31, 2026 |  |  | 5,895,221 |
July 31, 2027 |  |  | 3,892,722 |
Remaining balance |  |  | 162,246,385 |
|  | $ | 172,951,810 |
For U.S. federal income tax purposes, a change in ownership under IRC Section 382 has occurred as a result of the Company's acquisitions in prior years. When an ownership change has occurred, the utilization of these losses against future income would be subject to an annual limitation, which would be equal to the value of the acquired company immediately prior to the change in ownership multiplied by the IRC Section 382 rate in effect during the month of the change. The Company's Canadian net operating loss carry-forwards in Canadian dollars expire as follows:
July 31, 2027 |  | $ | 183,105 |
July 31, 2028 |  |  | 629,788 |
July 31, 2029 |  |  | 769,072 |
July 31, 2030 |  |  | 764,230 |
July 31, 2031 |  |  | 1,570,266 |
Remaining balance |  |  | 969,872 |
|  | $ | 4,886,333 |

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