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INCOME TAXES | 12 Months Ended
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Dec. 31, 2011
INCOME TAXES |
INCOME TAXES |
NOTE 7 INCOME TAXES In various transactions entered into on February 21, 1992, as well as transactions during 2005, the Company had ownership changes, as that term is defined under the Internal Revenue Code ("IRC") Section 382 (g). As a result, the tax net operating loss carryforwards and the investment tax credit carryforwards are subject to annual limitations under IRC Section 382, following the date of such ownership change. Except as noted below, the Company may receive delayed future benefits from net operating loss carryforwards or investment tax credit carryforwards existing as of the dates of the ownership change. At December 31, 2011 and 2010, the Company estimates those tax loss carry forwards to be $140.5 million and $125.7 million, respectively expiring starting in 2012 and going through 2031. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2011 and 2010 respectively, are presented below:
|  | 2011 |  | 2010 |
--- | --- | --- | --- | --- | ---
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |
Alternative minimum tax (AMT) credit carryforward |  | $ | 41 |  | $ | 41 |
Net operating loss carryforward |  |  | 46,211 |  |  | 40,396 |
Mineral Property |  |  | 2,528 |  |  | 2,468 |
Other temporary differences |  |  | 5,330 |  |  | 2,468 |
Capital loss carryforward |  |  | 241 |  |  | 242 |
Total gross deferred tax assets |  |  | 54,351 |  |  | 45,615 |
Less: valuation allowance |  |  | (53,578 | ) |  | (37,543 | )
Net deferred tax assets |  | $ | 773 |  | $ | 8,072 |
Deferred tax liabilities: |  |  |  |  |  |  |
Reclamation obligation |  |  | 282 |  |  | 189 |
Mineral Property |  |  | (41 | ) |  | (7,246 | )
Basis in TSVLP |  |  | (1,014 | ) |  | (1,015 | )
Acquisition related deferred tax liability |  |  | (78,786 | ) |  | (78,966 | )
Total Deferred tax liabilities |  | $ | (79,559 | ) | $ | (87,038 | )
Total net deferred tax liability |  | $ | (78,786 | ) | $ | (78,966 | )
Breakdown between current and non-current: |  |  |  |  |  |  |
Current deferred tax liability |  |  | — |  |  | (393 | )
Non-current deferred tax liability |  |  | (78,786 | ) |  | (78,573 | )
Total net deferred tax liability |  | $ | (78,786 | ) | $ | (78,966 | )
The Company believes that it is unlikely that the gross deferred tax asset will be realized. Therefore, a valuation allowance has been provided for most of the gross deferred tax assets. The change in valuation allowance of approximately $16.0 million primarily reflects an increase of net operating loss carryforwards. The acquisition related deferred tax liability for 2011 consists of $78.4 million and $0.4 million for mineral properties and fixed assets, respectively. A reconciliation of the tax provision for 2011, 2010 and 2009 at statutory US Federal and State income tax rates to the actual tax provision recorded in the financial statement is comprised of the following components:
|  | 2011 |  | 2010 |  | 2009 |
--- | --- | --- | --- | --- | --- | --- | ---
|  | (in thousands) |
US Federal and State tax recovery at statutory rate |  | $ | (21,098 | ) | $ | (11,895 | ) | $ | (12,047 | )
Reconciling items: |  |  |  |  |  |  |  |  |  |
FIN 48 adjustment due to tax years becoming statute barred |  |  | (180 | ) |  | — |  |  | (784 | )
Prior year true ups/acquisitions |  |  | (8,074 | ) |  | 56 |  |  | 103 |
Adjustment for foreign tax rate |  |  | 1,342 |  |  | 853 |  |  | 1,041 |
Tax rate changes |  |  | (24 | ) |  | 2 |  |  | (44 | )
Imputed interest |  |  | 119 |  |  | 104 |  |  | 99 |
Other permanent differences |  |  | 8,838 |  |  | 1,760 |  |  | 220 |
NOL expired |  |  | 2,862 |  |  | 746 |  |  | 571 |
Valuation allowance |  |  | 16,035 |  |  | 6,376 |  |  | 4,465 |
Tax Recovery |  | $ | (180 | ) | $ | (1,998 | ) | $ | (6,376 | )
As at January 1, 2007, the Company did not have any unrecognized tax benefits. As a result of the 2007 acquisitions, the Company recognized a $0.6 million liability plus $0.7 million of accrued interest and penalties which relate to the Mexican properties and was accounted for as a part of the purchase price allocation. During 2009, $0.4 million of the liability and $0.4 million of the accrued interest and penalties were reversed due to a lapse of the statute of limitations for those tax years. During 2011, the remainder of the liability and accrued interest and penalties were reversed due to a lapse of the statute of limitations for the remaining outstanding tax year. As a result, the balance for the liability and accrued interest and penalties were nil as at December 31, 2011. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | Liability For Unrecognized Tax Benefits |
--- | --- | --- | ---
|  | (in thousands) |
Balance at January 1, 2011 |  | $ | 501 |
Additions for Tax Positions of Current Period |  |  | — |
Reductions for Tax Positions of Current Period |  |  | — |
Additions for Tax Positions of Prior Years |  |  | — |
Reductions for Tax Positions of Prior Years |  |  | — |
Reduction for Lapse of Statute of Limitations |  |  | (501 | )
Other |  |  | — |
Balance at December 31, 2011 |  | $ | — |
The Company or its subsidiaries file income tax returns in Canada, the United States, and Mexico. These tax returns are subject to examination by local taxation authorities provided the tax years remain open to audit under the relevant statute of limitations. The following summarizes the open tax years by major jurisdiction: United States: 2007 to 2011 Canada: 2004 to 2011 Mexico: 2005 to 2011

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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