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Income Taxes
 12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
Income Taxes

6. Income taxes:

 

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

 

(in thousands) 2013 2012
Current:    
  United States $      5  $      -  
  Foreign 12  18 
Deferred:    
  United States (614) (853)
  Foreign -   -  
Operating loss and credit carryovers:    
  United States 421 187
  Foreign     -       -  
Income tax benefit   $(176) $(648)

 

Consolidated loss before income taxes includes losses from foreign operations of $1,564,000 and $1,944,000 in 2013 and 2012, 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, 2013 and 2012 consolidated balance sheets include the following components:

 

(in thousands) 2013 2012
Deferred tax assets:    
  Loss carryovers $9,852  $10,118 
  Deferred Gain 2,335  1,253 
  Stock option compensation expense 932  900 
  Royalty 1,363  1,492 
  Earnings in Unconsolidated Subsidiary 798  496 
  Severance 23  30 
  Unrealized loss on derivative securities -   79 
  Other 107  106 
  Valuation allowance (12,545) (11,441)
Total deferred tax assets   2,865    3,033 
Deferred tax liabilities:    
  Unrealized gain on derivative securities 160  -  
  MH-LLC investment 1,168  819 
  Exploration costs 845  845 
  Unrealized gains on marketable equity securities 688  2,328 
  Other        4         4 
Total deferred tax liabilities 2,865  3,996 
     Net deferred tax liabilities $    -     $963 

 

At December 31, 2012, Solitario has classified 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 benefit for income taxes is as follows:

 

(in thousands)   2013     2012  
Expected income tax benefit $(741) $(1,444)
Non-deductible foreign expenses -    1 
Non-deductible foreign stock compensation expense 18  20 
Foreign tax rate differences 31  72 
State income tax 303  (82)
Change in valuation allowance 233  629 
MH-LLC Investment 16  102 
Permanent differences and other (4) 54 
Income tax benefit  $(176)  $(648)

 

During 2013 the valuation allowance was decreased primarily as a result of reduction in the value of its holdings of Kinross with a corresponding decrease in the built-in gains and during 2012 the valuation allowance was increased primarily as a result of increases in Solitario foreign net operating loss carry-forwards, for which it was more likely than not that the deferred tax benefit would not be realized.

 

At December 31, 2013, Solitario has unused US federal Net Operating Loss ("NOL") carryovers of $1,250,000 and unused US State NOL carryovers of $3,543,000 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 two to five years depending on the foreign jurisdiction.

 

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 2010 through 2013. The tax years that remain open to examination by the State of Colorado are years 2009 through 2013. The tax years that remain open to examination by Mexico are years 2010 through 2013. 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, 2013, or December 31, 2012 or for the years then ended.