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10. Income Taxes
 12 Months Ended
Dec. 31, 2012
Income Taxes  
Income Taxes

The Company’s income tax provision (benefit) for the years ending December 31, 2012, 2011, and 2010, are as follows:

 

    2012     2011     2010  
Federal                  
Current   $ -     $ -     $ -  
Deferred     151,915       87,675       (448,182 )
Total   $ 151,915     $ 87,675     $ (448,182 )
                         
State                        
Current   $ -     $ 9,168     $ -  
Deferred     15,192       8,767       (44,818 )
Total   $ 15,192     $ 17,935     $ (44,818 )
                         
Foreign   $ -     $ -     $ -  
                         
Total provision (benefit)   $ 167,107     $ 105,610     $ (493,000 )

 

Domestic and foreign components of income (loss) from operations before income taxes for the years ended December 31, 2012, 2011, and 2010 are as follows:

 

    2012     2011     2010  
Domestic   $ 301,391     $ 1,342,530     $ 890,101  
Foreign     (692,820 )     (600,000 )     (577,888 )
Total   $ (391,429 )   $ 742,530     $ 312,213  

 

At December 31, 2012 and 2011, the Company had net deferred tax assets as follows:

 

    2012     2011  
Deferred tax asset:            
Property, plant, and equipment   $ -     $ 79,164  
Other     11,151       2,926  
Foreign exploration costs     208,855       249,309  
Foreign net operating loss carryforward     374,110       390,000  
Foreign property, plant, and equipment     217,887          
Federal and state net net operating                
   loss carry forward     39,824       65,159  
      Deferred tax asset     851,827       786,558  
                 
Valuation allowance (foreign)     (605,496 )     (390,000 )
Valuation allowance (federal)     -       -  
      Total deferred tax asset     246,331       396,558  
                 
Deferred tax liability:                
   Property, plant, and equipment     (16,880 )     -  
      Total deferred tax liability     (16,880 )     -  
                 
Net Deferred Tax Asset   $ 229,451     $ 396,558  

 

Existing and forecasted pretax earnings for financial reporting purposes are sufficient to generate the estimated required future taxable income required to realize the recognized federal net deferred tax asset as of December 31, 2012.

 

At December 31, 2012, the Company has United States net operating loss carry forwards of approximately $68,000 that expire at various dates between 2026 and 2029.  In addition, the company has unexpired Montana state net operating loss carry forwards of approximately $382,000 which expire between 2013 and 2019, and unexpired Idaho state net operating loss carry forwards of approximately $165,000, which expire in 2032.  The company has approximately $1.3 million of Mexican net operating loss carry forwards which expire between 2019 and 2022.

 

The income tax provision (benefit) differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income (loss) for the years ended December 31, 2012, 2011 and 2010 due to the following:

 

    2012     2011     2010  
                                                 
Computed expected tax provision (benefit)   $ (137,000 )     -35.0 %   $ 259,886       35.0 %   $ 106,000       34.0 %
Effect of permanent differences     -       0.0 %     4,662       0.6 %     30,000       9.6 %
Foreign taxes     34,641       8.9 %     24,000       3.2 %     -       -  
Other(1)     61,770       15.8 %     126,062       17.0 %     -       -  
Increase in valuation allowance     207,696       53.1 %     -       -       -       -  
Release of valuation allowance     -       0.0 %     (309,000 )     -41.6 %     (629,000 )     -202.0 %
   Total   $ 167,107       42.7 %   $ 105,610       14.2 %   $ (493,000 )     -158.4 %

 

(1)  Meals and entertainment, effect of state taxes, change of prior year estimate, and rate differential, as management has refined their estimate to 38.5% in 2011.

 

During the years ended December 31, 2012, 2011, and 2010, there were no material uncertain tax positions taken by the Company.  The Company United States income tax filings are subject to examination for the years 2010 through 2012, and 2011 and 2012 in Mexico. In the event that the Company is assessed penalties and or interest, penalties will be charged to other operating expense and interest will be charged to interest expense.