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INCOME AND MINING TAXES | 12 Months Ended
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Dec. 31, 2017
INCOME AND MINING TAXES. |
INCOME AND MINING TAXES | NOTE 9 INCOME AND MINING TAXES The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. At December 31, 2017, the Company has not completed the accounting for the tax effects of enactment of the Act; however, in certain cases as described below, the Company has made a reasonable estimate of the effects on the existing deferred tax balances and the one-time transition tax. The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, the Company is still analyzing certain aspects of the Act and refining the calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the re-measurement of the deferred tax balance was a reduction of $4.2 million to deferred tax liabilities, and a reduction of $23.7 million to the deferred tax assets, which have a valuation allowance provided against them. The one-time transition tax is based on the Company’s total post-1986 earnings and profits (“E&P”) that were previously deferred from US income taxes. Based on preliminary calculations the Company will have $nil payable under the one-time transition tax. The Company has not yet completed the calculation as it continues to review the eligibility of foreign tax credits, along with earnings held in cash and other specified assets. This amount may change when the Company finalizes the calculation of post-1986 foreign E&P previously deferred from US federal taxation. On December 29, 2017 the Senate of Argentina passed a significant tax reform to the country’s tax system. The law changes the corporate tax rate from 35% to 25% by 2020. As a result of the tax reform, the Company recorded a $3.9 million reduction to deferred tax liabilities on certain Argentine assets acquired in the 2012 Minera Andes acquisition and a reduction of $12.4 million to our deferred tax assets, which have a full valuation allowance provided against them. The Company’s deferred income and mining tax benefit consisted of:
|  | 2017 |  | 2016 |  | 2015
United States |  | $ | 10,349 |  | $ | 515 |  | $ | (442)
Foreign |  |  | 5,020 |  |  | 3,234 |  |  | 25,002
Deferred tax benefit |  | $ | 15,369 |  | $ | 3,749 |  | $ | 24,560
The Company’s net (loss) income before income and mining tax consisted of:
|  | 2017 |  | 2016 |  | 2015
United States |  | $ | (19,913) |  | $ | (13,959) |  | $ | (19,935)
Foreign |  |  | (6,090) |  |  | 31,265 |  |  | (25,075)
Net (loss) income before tax |  | $ | (26,003) |  | $ | 17,306 |  | $ | (45,010)
A reconciliation of the tax provision for 2017, 2016 and 2015 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 |  | 2017 |  | 2016 |  | 2015 |
(Loss) income before income and mining taxes |  | $ | (26,003) |  | $ | 17,306 |  | $ | (45,010) |
Statutory tax rate |  |  | 35% |  |  | 34% |  |  | 34% |
US Federal and State tax recovery at statutory rate |  |  | (9,101) |  |  | 5,884 |  |  | (15,303) |
Reconciling items: |  |  |  |  |  |  |  |  |  |
Equity pickup in MSC |  |  | (16) |  |  | (4,533) |  |  | (821) |
Impairment of MSC |  |  | — |  |  | — |  |  | 4,004 |
Deferred foreign income inclusion |  |  | 21,002 |  |  | — |  |  | — |
Foreign tax credits |  |  | (16,628) |  |  | — |  |  | — |
Tax rate changes |  |  | 28,048 |  |  | — |  |  | — |
Revisions to prior year estimates |  |  | (573) |  |  | (828) |  |  | 906 |
Adjustment for foreign tax rates |  |  | 115 |  |  | (501) |  |  | (1,230) |
Other permanent differences |  |  | (1,761) |  |  | 818 |  |  | (15,694) |
Unrealized foreign exchange rate (loss)/gain |  |  | 2,469 |  |  | 5,972 |  |  | 9,389 |
NOL expires and revisions |  |  | (2,233) |  |  | 586 |  |  | 1,215 |
Valuation allowance |  |  | (36,691) |  |  | (11,147) |  |  | (7,026) |
Tax benefit |  | $ | (15,369) |  | $ | (3,749) |  | $ | (24,560) |
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, 2017 and 2016 respectively are presented below:
|  | 2017 |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |
Net operating loss carryforward |  | $ | 72,078 |  | $ | 96,312 |
Mineral Properties |  |  | 59,905 |  |  | 14,195 |
Other temporary differences |  |  | 862 |  |  | 1,114 |
Total gross deferred tax assets |  |  | 132,845 |  |  | 111,621 |
Less: valuation allowance |  |  | (123,648) |  |  | (111,621) |
Net deferred tax assets |  | $ | 9,197 |  | $ | — |
Deferred tax liabilities: |  |  |  |  |  |  |
Acquired mineral property interests |  |  | (17,627) |  |  | (23,655) |
Total deferred tax liabilities |  | $ | (17,627) |  | $ | (23,655) |
Total net deferred tax liability |  | $ | (8,430) |  | $ | (23,655) |
The Company reviews the measurement of its deferred tax assets at each balance sheet date. As at December 31, 2017 the Company recognized a deferred tax asset to the extent of the deferred tax liability recognized on the acquired mineral property interests associated with the Gold Bar project, in the amount of $6.4 million. During the fourth quarter the Company commenced construction of the project, and is now able to reasonably estimate when the temporary difference associated with the deferred tax liability will reverse. The reversal is expected to occur over the same time period as existing tax assets, which have previously been provided for by the valuation allowance. On the basis of available information at December 31, 2017, the Company has provided a valuation allowance for certain of its deferred assets where the Company believes it is more likely than not that some portion or all of such assets will be realized. The change in valuation allowance of approximately $12 million primarily reflects an increase in relation to the Black Fox acquisition, partially offset by the reduction to tax assets pursuant to the recent tax reforms. 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
2017 |  | $ | 111,621 |  | $ | 51,220 |  | $ | (39,193) |  | $ | 123,648
2016 |  |  | 122,768 |  |  | 1,430 |  |  | (12,577) |  |  | 111,621
2015 |  |  | 129,794 |  |  | 6,873 |  |  | (13,899) |  |  | 122,768
| (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 release of valuation allowance, reductions in deferred tax rates, 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 $6.2 million as at December 31, 2017 (2016 - $12.6 million). As at December 31, 2017 and 2016, the Company did not have any income-tax related accrued interest and tax penalties. 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 |  | $ | 165,654 |  | 2018-2037
Mexico |  | Non-operating losses |  |  | 33,355 |  | 2018-2027
Canada(a) |  | Non-operating losses |  |  | 29,906 |  | 2018-2037
Argentina(a) |  | Non-operating losses |  |  | 78,964 |  | 2018-2022
| (a) |  | The losses in the United States, Canada, and Argentina are part of 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: 2014 to 2017 Canada: 2010 to 2017 Mexico: 2013 to 2017 Argentina: 2013 to 2017

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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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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