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Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

Consolidated loss before income taxes includes losses from foreign operations of $79,000 and $1,261,000 in 2020 and 2019, respectively.

 

The net deferred tax assets/liabilities in the December 31, 2020 and 2019 consolidated balance sheets include the following components:

 

(in thousands)   2020     2019  
Deferred tax assets:            
  Loss carryovers   $ 12,636     $ 13,284  
  Investment in Mineral Property     1,669       1,669  
  Capitalized Exploration Costs     410       652  
  Stock option compensation expense     286       228  
  Unrealized loss on derivative securities     148       237  
  Other     110       135  
  Valuation allowance     (15,050 )     (15,999 )
Total deferred tax assets     209       206  
Deferred tax liabilities:                
  Unrealized gains on marketable equity securities     207       198  
  Other     2       8  
Total deferred tax liabilities     209       206  
     Net deferred tax liabilities   $ -     $ -  

 

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

 

(in thousands)   2020     2019  
Expected income tax benefit   $ (197 )   $ (691 )
Equity based compensation     7       7  
Foreign tax rate differences     (8 )     (116 )
State income tax     (37 )     (84 )
Expiration of Capital Loss Carryovers     1,225       66  
Adjustment to Deferred Taxes     (23 )     (101 )
Change in valuation allowance     (949 )     900  
Permanent differences and other     (18 )     19  
Income tax (benefit) expense   $ -     $ -  

 

During 2020, the valuation allowance decreased primarily due to the expiration of Capital Loss carryovers. During 2019, the valuation allowance increased primarily due to the addition of deferred tax assets related to current year net operating losses.

 

At December 31, 2020, Solitario has unused US Federal Net Operating Loss carryovers of $19,381,000 and unused US State Net Operating Loss carryovers of $20,080,000 which begin expiring in 2027. As a result of the ownership change of Zazu Metals (Alaska) Corp, that resulted from our acquisition of Zazu, utilization of some of these federal and state losses will be limited due to the annual limitation provided by Section 382 of the Internal Revenue Code. Solitario has unused Capital Loss carryovers of $5,576,000 for US Federal and US State purposes which begin to expire in 2021. Solitario has Canadian loss carryforwards of $9,822,000 which begin expiring in 2027. Other foreign loss carryforwards for which Solitario has provided a full valuation allowance relate to Solitario’s exploration activities in Peru. The Peru losses do not expire.

 

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, 2020 or December 31, 2019, 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 2017 and forward and Solitario’s Peru and State of Colorado returns for tax years 2016 and forward are subject to examination. Solitario’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. Solitario has no accrued interest or penalties related to uncertain tax positions as of December 31, 2020, or December 31, 2019 or for the years then ended.