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Income Taxes | 12 Months Ended
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Dec. 31, 2017
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) | 2017 | 2016
Current: |  |
Federal | $ - | $ -
State | - | -
Foreign | - | -
Deferred: |  |
Federal | - | (309)
State | - | (44)
Foreign | - | -
Income tax (benefit) expense | $ - | $ (353)
Income tax (benefit) expense is included in the financial statements as follows:
(in thousands) | 2017 | 2016
Income tax (benefit), Operations | $ - | $ (353)
Income tax expense, Other Comprehensive Income | $ - | 353
Consolidated loss before income taxes includes losses from foreign operations of $322,000 and $154,000 in 2017 and 2016, respectively. See Note 3, “Marketable Equity Securities,” for 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, 2017 and 2016 consolidated balance sheets include the following components:
(in thousands) | 2017 | 2016
Deferred tax assets: |  |
Loss carryovers | $12,178 | $8,168
Investment in Mineral Property | 1,952 | -
Capitalized Exploration Costs2 | 1,205 | -
Stock option compensation expense | 13 | -
Royalty | 989 | 1,482
Unrealized loss on derivative securities | 28 | -
Other | 135 | 105
Valuation allowance | (16,249) | (9,118)
Total deferred tax assets | 251 | 637
Deferred tax liabilities: |  |
Unrealized gain on derivative securities | - | 196
Unrealized gains on marketable equity securities | 230 | 395
Other | 21 | 46
Total deferred tax liabilities | 251 | 637
Net deferred tax liabilities | $ - | $ -
A reconciliation of expected federal income taxes on income (loss) from continuing operations at statutory rates, with the expense for income taxes is as follows:
(in thousands) | 2017 | 2016
Expected income tax benefit | $(355) | $(701)
Reversal of disproportionate tax effect in other comprehensive income | - | -
Equity based compensation | - | 366
Foreign tax rate differences | 17 | 6
State income tax | (27) | (237)
Impact of Tax Legislation | 4,494 | -
Tax attributes of disposed subsidiary | - | 1,652
Previously unrecognized basis in disposed subsidiary | - | (1,884)
Change in valuation allowance | (4,120) | 547
MH-LLC investment | - | -
Permanent differences and other | (9) | (102)
Income tax (benefit) expense | $ - | $ (353)
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. Solitario estimated its provision for income taxes in accordance with the Tax Act and guidance available as of the date of this filing. In accordance with ASC 740, Income Taxes, the impact of a change in tax law is recorded in the period of enactment. Consequently, Solitario has recorded a decrease to its net deferred tax assets of $4,494,000 with a corresponding net adjustment to the valuation allowance for the year ended December 31, 2017. While the Tax Act provides for a territorial tax system, beginning in 2018, it includes two new U.S. tax base erosion provisions, the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company currently has no profitable foreign subsidiaries. Therefore, this provision currently has no impact on the Company. The BEAT provisions in the Tax Act eliminates the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. The Company does not expect it will be subject to this tax and therefore has not included any tax impacts of BEAT in its consolidated financial statements for the year ended December 31, 2017. Based on Solitario’s current interpretation and subject to the release of the related regulations and any future interpretive guidance, Solitario believes the effects of the change in tax law incorporated herein are substantially complete. Additional information that may affect our income tax accounts and disclosures would include further clarification and guidance on how the Internal Revenue Service will implement tax reform, further clarification and guidance on how state taxing authorities will implement tax reform and the related effect on our state income tax returns, completion of our 2017 tax return filings, and the potential for additional guidance from the FASB and SEC related to tax reform. As a result of the acquisition of Zazu Metals Corporation, Solitario acquired deferred tax assets totaling $11,202,000 primarily related to US federal and state net operating losses, mineral properties and exploration costs, and Canadian net operating losses. These deferred tax assets were fully offset by a valuation allowance, as the Solitario does not believe it is more likely than not that the assets will be utilized in the future. As a result of the ownership change of Zazu Metals (Alaska) Corp, utilization of its United States Federal and State of Alaska net operating losses will be limited due to the annual limitation provided by Section 382 of the Internal Revenue Code. During 2017, the valuation account was increased primarily due to the acquisition of Zazu Metals Corporation and the impact of the Tax Act. During 2016, the valuation allowance was decreased primarily due to the removal of deferred tax assets related to abandoned properties in Mexico. During 2017 and 2016, Solitario recorded other comprehensive (loss) income before income tax in the amounts of $(136,000) and $954,000, respectively. In 2017 and 2016 Solitario recognized an income tax benefit (expense) of nil and $(353,000), respectively, in other comprehensive income/(loss) with an offsetting income tax expense (benefit), respectively in the statement of operations. A valuation allowance was provided for the deferred tax assets from losses in both other comprehensive income and the statement of operations during 2017. At December 31, 2017, Solitario has unused US Federal Net Operating Loss ("NOL") carryovers of $10,914,000 and unused US State NOL carryovers of $11,338,000 which begin expiring in 2027. Solitario has unused Capital Loss carryovers of $11,879,000 for US Federal and US State purposes which begin expiring in 2019. Solitario has Canadian loss carryforwards of $12,192,000 which begin expiring in 2026. Other foreign loss carryforwards for which Solitario has provided a full valuation allowance related to Solitario’s exploration activities in Peru. The Peru losses do not expire. As a result of the ownership change of Zazu Metals (Alaska) Corp, which resulted from the acquisition, utilization of its United States Federal and State of Alaska net operating losses is substantially limited due to the annual limitation provided by Section 382 of the Internal Revenue Code. Solitario adopted 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, 2017 or December 31, 2016, 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, State of Colorado, State of Alaska, Canada and Peru. Solitario’s United States federal, Canada and State of Alaska returns for years 2014 and forward and Solitario’s Peru and State of Colorado returns for tax years 2013 and forward are subject to examination. 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, 2017, or December 31, 2016 or for the years then ended

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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