NOTE 8 INCOME TAXES

A reconciliation of the tax provision for 2015, 2014 and 2013 at statutory U.S. Federal and State income tax rates to the actual tax provision recorded in the financial statements is computed as follows:


Expected tax recovery at	2015		2014		2013
Loss before income taxes	$	(45,010)		(419,113)		(201,107)
Statutory tax rate		34%		34%		34%
US Federal and State tax recovery at statutory rate	$	(15,303)	$	(142,498)	$	(68,376)
Reconciling items:
Equity pickup in MSC		(821)		1,850		(2,924)
Impairment of MSC		4,004		7,407		33,557
Revisions to prior year estimates		906		8,330		(19,016)
Adjustment for foreign tax rates		(1,230)		(1,803)		6,573
Other permanent differences		(15,694)		(14,760)		(11,296)
Unrealized foreign exchange rate (loss)/gain		9,389		19,444		(28,319)
NOL expired		1,215		10,268		1,711
Valuation allowance		(7,026)		4,592		34,725
Tax Recovery	$	(24,560)	$	(107,170)	$	(53,365)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as at December 31, 2015 and 2014 respectively are presented below:


	2015		2014
Deferred tax assets:
Net operating loss carryforward	$	105,555	$	108,070
Mineral Properties		11,842		14,797
Other temporary differences		5,371		7,141
Total gross deferred tax assets		122,768		130,008
Less: valuation allowance		(122,768)		(129,794)
Net deferred tax assets	$	—	$	214
Deferred tax liabilities:
Investments	$	—	$	(214)
Acquired mineral property interests		(26,899)		(51,899)
Total deferred tax liabilities		(26,899)		(52,113)
Total net deferred tax liabilities	$	(26,899)	$	(51,899)

The Company believes that it is unlikely that the full amount of deferred tax assets will be realized. Therefore, a valuation allowance has been provided for most of the full amount of deferred tax assets. The change in valuation allowance of approximately $7.0 million primarily reflects a decrease of net operating loss carryforwards and mineral properties. In 2014 the change in valuation allowance of approximately $4.6 million primarily reflects a decrease of net operating loss carryforwards.

The table below summarizes changes to the valuation allowance:


For the year ended December 31,		Balance at Beginning of Period		Additions (a)		Deductions (b)		Balance at End of Period
2015	$	129,794	$	6,873	$	(13,899)	$	122,768
2014		125,202		11,514		(6,922)		129,794
2013		90,477		35,547		(822)		125,202

(a)

The additions to valuation allowance mainly results from the Company and its subsidiaries incurring losses and exploration expenses for tax purposes which do not meet the more-likely-than-not criterion for recognition of deferred tax assets.

(b)

The reductions to valuation allowance mainly results from expiration of the Company's tax attributes and foreign exchange reductions of tax attributes in Mexico and Argentina.

The deferred tax liability related to the Minera Andes acquisition was $19.8 million as at December 31, 2015 (2014 - $26.6 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, 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 are no deductions allowed for development type costs but exploration and prospecting costs can be claimed. In addition, certain undeducted exploration expenditures incurred prior to January 1, 2014 are also deductible in the calculation of the Special Mining Duty. For the year ended December 31, 2015 and 2014, the Company had no taxes payable under the 7.5% Special Mining Duty.

The following table summarizes the Company’s losses that can be applied against future taxable profit:


Country	Type of Loss		Amount	Expiry Period
United States (a)	Non operating losses	$	158,974	2016-2035
Mexico	Non operating losses		57,822	2016-2025
Canada	Non operating losses		20,349	2016-2035
Argentina	Non operating losses		85,878	2016-2020

(a)

The losses in the United States and Argentina are part of a multiple consolidating groups, and therefore, may be restricted in use to specific projects.

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: 2012 to 2015

Canada: 2008 to 2015

Mexico: 2011 to 2015

Argentina: 2011 to 2015