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INCOME TAXES | 12 Months Ended
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Dec. 31, 2013
INCOME TAXES |
INCOME TAXES | NOTE 9 INCOME TAXES In various transactions entered into on February 21, 1992, as well as transactions during 2005, the Company had ownership changes, as is defined under the Internal Revenue Code ("IRC") Section 382 (g). Following the date of such ownership change, the tax net operating loss carryforwards and the investment tax credit carryforwards are subject to annual limitations under IRC Section 382. 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, 2013 and 2012, the Company estimates tax loss carry forwards to be $303.3 million and $252.9 million, respectively expiring starting in 2014 and going through 2033. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2013 and 2012 respectively are presented below:
|  | 2013 |  | 2012 |
--- | --- | --- | --- | --- | ---
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |
Alternative minimum tax (AMT) credit carryforward |  | $ | 41 |  | $ | 41 |
Net operating loss carryforward |  |  | 98,734 |  |  | 80,975 |
Mineral Properties |  |  | 19,884 |  |  | 297 |
Other temporary differences |  |  | 6,927 |  |  | 9,521 |
Capital loss carryforward |  |  | 241 |  |  | 241 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total gross deferred tax assets |  |  | 125,827 |  |  | 91,075 |
Less: valuation allowance |  |  | (125,202 | ) |  | (90,477 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax assets |  | $ | 625 |  | $ | 598 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax liabilities: |  |  |  |  |  |  |
Reclamation obligation |  |  | 389 |  |  | 416 |
Mineral Properties |  |  | — |  |  | — |
Basis in Tonkin Springs Venture LP |  |  | (1,014 | ) |  | (1,014 | )
Acquisition related deferred tax liability |  |  | (158,855 | ) |  | (229,522 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax liabilities |  | $ | (159,480 | ) | $ | (230,120 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total net deferred tax liability |  | $ | (158,855 | ) | $ | (229,522 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
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 $34.7 million primarily reflects an increase of net operating loss carryforwards. The deferred tax liability related to the Minera Andes acquisition was $101.5 million as at December 31, 2013 (2012—$156.8 million). On December 11, 2013, the Mexican government enacted a tax reform that increased the effective tax rate applicable to the Company's Mexican operations. The law, effective January 1, 2014, increased the future corporate income tax rate to 30%, created a 10% withholding tax on dividends paid to non-resident shareholders and created a new Extraordinary Mining duty which is equal to 0.5% of gross revenues from the sale of gold, silver and platinum. Furthermore, the reform introduced a Special Mining Duty of 7.5%. The Special Mining Duty is deductible for income tax purposes. The Special Mining Duty is generally applicable to earnings before income tax, depreciation, depletion, amortization and interest. There will be no deductions related to development type costs but exploration and prospecting costs are deductible when incurred. Certain undeducted exploration expenditures incurred prior to January 1, 2014 are also deductible in the calculation of the Special Mining Duty. A reconciliation of the tax provision for 2013, 2012 and 2011 at statutory U.S. Federal and State income tax rates to the actual tax provision recorded in the financial statements is comprised of the following components:
|  | 2013 |  | 2012 |  | 2011 |
--- | --- | --- | --- | --- | --- | --- | ---
|  | (in thousands) |
US Federal and State tax recovery at statutory rate |  | $ | (68,377 | ) | $ | (31,925 | ) | $ | (21,098 | )
Reconciling items: |  |  |  |  |  |  |  |  |  |
Equity pickup in MSC |  |  | (2,924 | ) |  | (7,292 | ) |  | — |
Impact of Mexican tax reform |  |  | (1,921 | ) |  | — |  |  | — |
FIN 48 adjustment due to tax years becoming statute barred |  |  | — |  |  | — |  |  | (180 | )
Prior year true ups/acquisitions |  |  | (19,016 | ) |  | 781 |  |  | (8,074 | )
Adjustment for foreign tax rates |  |  | 8,680 |  |  | 3,245 |  |  | 1,342 |
Tax rate changes |  |  | (187 | ) |  | (1,869 | ) |  | (24 | )
Imputed interest |  |  | 171 |  |  | 135 |  |  | 119 |
Other permanent differences |  |  | 22,090 |  |  | (3,259 | ) |  | 8,869 |
Unrealized foreign exchange rate (loss)/gain |  |  | (28,317 | ) |  | (21,263 | ) |  | (31 | )
NOL expired |  |  | 1,711 |  |  | (2,696 | ) |  | 2,862 |
Valuation allowance |  |  | 34,725 |  |  | 36,899 |  |  | 16,035 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Tax Recovery |  | $ | (53,365 | ) | $ | (27,244 | ) | $ | (180 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31, 2013, there are no unrecognized tax benefits. The Company or its subsidiaries file income tax returns in Canada, the United States, Mexico, and Argentina. 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: 2010 to 2013 Canada: 2006 to 2013 Mexico: 2009 to 2013 Argentina: 2009 to 2013

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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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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 5: 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 6: 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 + Details
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