XML 69 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
Income Taxes

5. Income taxes:

 

          Solitario's income tax expense (benefit) consists of the following as allocated between foreign and United States components:

 

(in thousands) 2012  2011 
Current:    
  United States $   -    $   -   
  Foreign 18  14 
Deferred:    
  United States $(853) $407
  Foreign -   -  
Operating loss and credit carryovers:    
  United States 187 (1,056)
  Foreign     -       -  
Income tax expense (benefit) $(648) $(635)

 

          Consolidated income (loss) before income taxes includes losses from foreign operations of $1,944,000 and $2,657,000 in 2012 and 2011, respectively.

 

          See Note 1, “Business and Summary of Significant Accounting Policies” for a detail of the deferred taxes associated with the sale of marketable equity securities and the deferred taxes associated with unrealized gains and losses associated with other comprehensive income related to marketable equity securities.

 

          The net deferred tax assets/liabilities in the December 31, 2012 and 2011 consolidated balance sheets include the following components:

 

 

(in thousands) 2012 2011
Deferred tax assets:    
  Loss carryovers $10,118  $9,887 
  Deferred Gain 1,253  -
  Stock option compensation expense 900  648 
  Royalty 1,492  1,492 
  Earnings in Unconsolidated Subsidiary 496  314
  Severance 30  30 
  Unrealized loss on derivative securities 79  -  
  Other 106  67
  Valuation allowance (10,328) (9,699)
Total deferred tax assets 4,146  2,739 
Deferred tax liabilities:    
  Unrealized gain on derivative securities -   107 
  MH-LLC investment 1,932  1,083 
  Exploration costs 845  845 
  Unrealized gains on marketable equity securities 2,328  3,496 
  Other 4           
Total deferred tax liabilities 5,109  5,536 
     Net deferred tax liabilities $963  $2,797 

 

          At December 31, 2012 and 2011, Solitario has classified $963,000 and $1,627,000, respectively, of its deferred tax liability as current, primarily related to the current portion of its investment in Kinross common stock.

 

          A reconciliation of expected federal income taxes on income (loss) from operations at statutory rates, with the expense (benefit) for income taxes is as follows:

 

(in thousands) 2012   2011  
Expected income tax expense (benefit) $(1,444) $(2,585)
Non-deductible foreign expenses 1  1 
Non-deductible foreign stock compensation expense 20  16 
Foreign tax rate differences 72  90 
State income tax (82) (56)
Change in valuation allowance 629  621 
LLC Investment 102  1,221 
Permanent differences and other 54  57 
Income tax expense (benefit) $(648) $(635)

 

          During 2012 and 2011 the valuation allowance was increased primarily as a result of increases in Solitario foreign net operating loss carryforwards, for which it was more likely than not that the deferred tax benefit would not be realized.

 

          At December 31, 2012, Solitario has unused US federal Net Operating Loss ("NOL") carryovers of $2,502,000 and unused US State NOL carryovers of $3,409,000 both of which begin expiring in 2030. Solitario has foreign loss carryforwards for which Solitario has provided a full valuation allowance and which expire over various periods from five years to no expiration depending on the foreign jurisdiction.

 

          Solitario adopted the provisions ASC 740, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 requires that Solitario recognize in its consolidated financial statements, only those tax positions that are “more-likely-than-not” of being sustained as of the adoption date, based on the technical merits of the position. As a result of the implementation of ASC 740, Solitario performed a comprehensive review of its material tax positions in accordance with recognition and measurement standards established by ASC 740. The provisions of ASC 740 had no effect on Solitario’s financial position, cash flows or results of operations at December 31, 2012 or December 31, 2011, or for the years then ended as Solitario had no unrecognized tax benefits.

 

          Solitario and its subsidiaries are subject to the following material taxing jurisdictions: United States Federal, States of Colorado, and Nevada, Mexico, Peru and Brazil. The tax years that remain open to examination by the United States Internal Revenue Service are years 2009 through 2012. The tax years that remain open to examination by the State of Colorado are years 2008 through 2012. The tax years that remain open to examination by Mexico are years 2009 through 2012. All tax years remain open to examination in Peru and Brazil. Solitario’s policy is to recognize interest and penalties related to uncertain tax benefits in income tax expense. Solitario has no accrued interest or penalties related to uncertain tax positions as of December 31, 2011, or December 31, 2012 or for the years then ended.