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10. Income Taxes
 12 Months Ended
Dec. 31, 2016
Notes  
10. Income Taxes

10. Income Taxes

 

The Company did not recognize a provision (benefit) for income taxes for the years ended December 31, 2016 and 2015 due to net losses for those periods.

 

At December 31, 2016 and 2015, the Company had net deferred tax assets principally arising from the net operating loss carry forwards for income tax purposes multiplied by an expected tax rate of 40%. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax assets, a valuation allowance equal to the net deferred tax assets has been established at December 31, 2016 and 2015. The significant components of net deferred tax assets at December 31, 2016 and 2015 were as follows:

 

 

 

 

December 31,

 

December 31,

 

 

2016

 

2015

Deferred tax asset

 

 

 

 

Net operating loss carry forward

$

4,346,000

$

3,436,000

Mineral properties

 

920,000

 

1,321,000

Asset retirement obligation

 

8,000

 

11,000

Stock based compensation

 

176,000

 

 

Derivative contracts

 

44,000

 

 

Discount on note payable

 

118,000

 

 

Total deferred tax assets

 

5,612,000

 

4,768,000

Valuation allowance

 

(4,712,000)

 

(4,153,000)

 

 

900,000

 

615,000

Deferred tax liabilities

 

 

 

 

Acquisition of mineral interest

 

(90,000)

 

(90,000)

Property, plant, and equipment

 

(810,000)

 

(525,000)

Total deferred tax liabilities

 

(900,000)

 

(615,000)

Net deferred tax asset

$

0

$

0

 

 

At December 31, 2016 and 2015 the Company had net operating loss carry forwards of approximately $10,900,000 and $8,600,000 respectively for both federal and the state of Idaho, which expire in the years 2019 through 2036.

 

The income tax benefit shown in the financial statements for the years ended December 31, 2016 and 2015 differs from the statutory rate as follows:

 

 

 

 

December 31,

2016

 

December 31,

2015

Provision (benefit) at statutory rate

 

$

(476,000)

 

$

(86,000)

State taxes, net of federal taxes

 

 

(68,000)

 

 

(12,000)

Adjustment of prior year tax estimate to actual

 

 

15,000

 

 

116,000

Increase (decrease) in valuation allowance

 

 

559,000

 

 

(18,000)

Total provision (benefit)

 

$

0

 

$

0

 

 

We are open to examination of our income tax filings in the United States and state jurisdictions for the 2014 through 2016 tax years. 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. Certain tax positions taken in the 2014 through 2016 tax years could result in adjustments to our exploration and development costs for tax purposes. However, such adjustments would not result in a tax provision because they would only revise to the net operating loss carry forwards balance.