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Income Taxes
 6 Months Ended
Jun. 30, 2011
Income Taxes

 

5.     Income Taxes

 

          Solitario accounts for income taxes in accordance with ASC 740, “Accounting for Income Taxes.” Under ASC 740, income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses and tax credits that are available to offset future taxable income and income taxes, respectively. A valuation allowance is provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 

Primarily as a result of increases in the value of Solitario's holdings of Kinross common stock recognized as other comprehensive income, Solitario estimated that its deferred tax liabilities exceeded its realizable deferred tax assets by $5,169,000 and $6,419,000 at June 30, 2011 and December 31, 2010.

 

          During the three months ended June 30, 2011, Solitario recorded deferred tax benefit of $152,000 and during the six months ended June 30, 2011, Solitario recorded a deferred tax expense of $93,000. During the three months ended June 30 2011, Solitario recorded deferred tax benefit of $69,000 to other comprehensive income related to net unrealized losses of $185,000 on marketable equity securities. During the six months ended June 30, 2011, Solitario recorded a deferred tax benefit of $1,880,000 related to net unrealized losses of $5,039,000 on marketable equity securities. In addition, on January 1, 2011, Solitario recorded deferred tax expense of $543,000 to retained earnings related to the prospective adjustment of $1,535,000 to retained earnings for the change in accounting principle upon the adoption of ASU 2010-13 discussed in Note 1 above. During the three and six months ended June 30, 2010, Solitario recorded deferred tax benefit of $178,000 and $293,000, respectively, in the statement of operations. Solitario recorded a deferred tax benefit during the three and six months ended June 30, 2010 of $195,000 and $723,000, respectively, to other comprehensive income related to net unrealized losses of $523,000 and $1,939,000, respectively, on marketable equity securities.