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INCOME AND OTHER TAXES | 12 Months Ended
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Dec. 31, 2023
INCOME AND OTHER TAXES |
INCOME AND OTHER TAXES | NOTE 9 – INCOME AND OTHER TAXES Income tax expense for the years ended December 31, 2023 and 2022 consisted of the following:
|  | 2023 |  |  | 2022 |
Current income tax expense: |  |  |  |  |  |
Domestic |  | $ | - |  |  | $ | 16,073 |
Foreign |  |  | - |  |  |  | - |
Total current |  |  | - |  |  |  | 16,073 |
Deferred income tax expense: |  |  |  |  |  |  |  |
Domestic |  |  | - |  |  |  | - |
Foreign |  |  | - |  |  |  | - |
Total deferred |  |  | - |  |  |  | - |
Total income tax expense |  | $ | - |  |  | $ | 16,073 |
Domestic and foreign components of income (loss) before income taxes for the years ended December 31, 2023 and 2022 were as follows:
|  | 2023 |  |  | 2022 |
Domestic |  | $ | (397,156 | ) |  | $ | 2,729,793 |
Foreign |  |  | (5,951,131 | ) |  |  | (2,285,059 | )
Income (loss) before income taxes |  | $ | (6,348,287 | ) |  | $ | 444,734 |
The income tax expense (benefit) differs from the amount of income tax determined by applying the U.S. federal income tax rate to pre-tax income (loss) for the years ended December 31, 2023 and 2022 due to the following:
|  | 2023 |  |  | 2022 |
U.S. federal statutory tax provision (benefit) |  | $ | (1,333,000 | ) |  | $ | 93,073 |
State income tax provision (benefit) net |  |  | (88,000 | ) |  |  | 67,000 |
Foreign taxes |  |  | (536,000 | ) |  |  | (136,000 | )
VAT refund reserve and other non-deductible items |  |  | 1,008,000 |  |  |  | 4,000 |
Adjustment for prior year tax estimate to actual-domestic |  |  | (7,000 | ) |  |  | 69,000 |
Adjustment for prior year tax estimate to actual-foreign |  |  | 136,000 |  |  |  | (32,000 | )
Impact on change in state tax rate |  |  | - |  |  |  | 7,000 |
Impact on change in foreign exchange rate |  |  | (275,000 | ) |  |  | (83,000 | )
Change in valuation allowance - Domestic |  |  | 170,000 |  |  |  | (358,000 | )
Change in valuation allowance - Foreign |  |  | 925,000 |  |  |  | 385,000 |
Total income tax expense |  | $ | - |  |  | $ | 16,073 |
At December 31, 2023 and 2022, the Company had net deferred tax assets and liabilities as follows:
|  | 2023 |  |  | 2022 |
Deferred tax asset: |  |  |  |  |  |
Domestic net operating loss carry forward |  | $ | 646,000 |  |  | $ | 307,000 |
Foreign net operating loss carry forward |  |  | 2,883,000 |  |  |  | 1,958,000 |
Allowance for doubtful accounts |  |  | 64,000 |  |  |  | 7,000 |
Other |  |  | 5,000 |  |  |  | - |
Deferred tax asset |  | $ | 3,598,000 |  |  | $ | 2,272,000 |
Valuation allowance (domestic) |  |  | (228,000 | ) |  |  | (58,000 | )
Valuation allowance (foreign) |  |  | (2,883,000 | ) |  |  | (1,958,000 | )
Total deferred tax asset |  | $ | 487,000 |  |  | $ | 256,000 |
Deferred tax liability: |  |  |  |  |  |  |  |
Property, plant, and equipment |  |  | (487,000 | ) |  |  | (245,000 | )
Other |  |  | - |  |  |  | (11,000 | )
Total deferred tax liability |  | $ | (487,000 | ) |  | $ | (256,000 | )
Net deferred tax asset after valuation allowance |  | $ | - |  |  | $ | - |
At December 31, 2023 and 2022, the Company had deferred tax assets arising principally from net operating loss carry forwards for income tax purposes. As management cannot determine that it is more likely than not the benefit of the net deferred tax asset will be realized, a valuation allowance equal to 100% of the net deferred tax asset has been recorded at December 31, 2023 and 2022. At December 31, 2023, the Company has federal net operating loss (“NOL”) carry forwards of approximately $1.66 million, $1.61 million of which will never expire but is limited to offsetting up to 80% of taxable income in any future year, and $0.05 million of which will expire at the end of 2037 but is not limited regarding offsetting taxable income in future years. The Company has Montana state NOL carry forwards of approximately $4.2 million which expire between 2024 and 2030, and Idaho state NOL carry forwards of approximately $1.7 million, which expire between 2034 and 2043. The Company has approximately $9.6 million of Mexican NOL carry forwards which expire between 2025 and 2033. All carryforwards in all jurisdictions are subject to certain limitations. During the years ended December 31, 2023 and 2022, there were no material uncertain tax positions taken by the Company. The Company’s United States income tax filings are subject to examination for the years 2020 through 2022 and for the years 2019 through 2023 in Mexico. However, for tax attributes from prior years, the statute remains open. The Company charges penalties on assessments to general and administrative expense and charges interest to interest expense. Mexican Tax Assessment In 2015, the Mexican tax authority (“SAT”) initiated an audit of the USAMSA’s 2013 income tax return. In October 2016, as a result of its audit, SAT assessed the Company $13.8 million pesos, which was approximately $666,400 in U.S. Dollars (“USD”) as of December 31, 2016. SAT’s assessment was based on the disallowance of specific costs that the Company deducted on the 2013 USAMSA income tax return. The assessment was settled in 2018 with no assessment due from the Company. In early 2019, the Company was notified that SAT re-opened its assessment of USAMSA’s 2013 income tax return and, in November 2019, SAT assessed the Company $16.3 million pesos, which was approximately $795,000 USD as of December 31, 2021. Management reviewed the 2019 assessment notice from SAT and, similar to the earlier assessment, believes the findings have no merit. An appeal was filed by the Company in November 2019 suspending SAT from taking immediate action regarding the assessment. The Company posted a guarantee of the amount in March 2020 as is required under the appeal process. In August 2020, the Company filed a lawsuit against SAT for resolution of the process and, in December 2020, filed closing arguments. In 2022, the Mexican court ruled against the Company in the above matter. The Company subsequently appealed the ruling. As of December 31, 2023, the updated SAT assessment was approximately $22.4 million pesos, or approximately $1,320,000 USD, which includes $352,000 of unpaid income taxes and $968,000 of interest and penalties. Management, along with its legal counsel, assessed the possible outcomes for this tax audit and believes, based on discussions with its attorneys located in Mexico, that the most likely outcome will be that the Company will be successful in its appeal resulting in no tax due. Management determined that no amount should be accrued at December 31, 2023 or December 31, 2022 relating to this potential tax liability. In March 2024, the Company received a favorable ruling from its appeal with no assessment due related to this audit of USAMSA’s 2013 income tax return by SAT. This ruling supports the Company’s position on this tax matter and has no impact on the Company’s financial statements at December 31, 2023. Mexico’s lower court will issue a final ruling on this matter as to whether this decision can be appealed. Mexico Value Added Tax USAMSA, which is part of the Mexico Antimony Segment, records a receivable for the Value Added Tax (“VAT” or “IVA”) it pays on certain goods and services as it should be reimbursed from the Mexican government. USAMSA has a reserve of $687,534 and $nil on its IVA receivable balance at December 31, 2023 and 2022, respectively. The net IVA receivable of $435,094 and $526,536 at December 31, 2023 and 2022, respectively, is recorded in “IVA receivable and other assets, net” in the Consolidated Balance Sheet.

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