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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Taxes  
Income Taxes

6. Income Taxes:

 

Consolidated loss before income taxes includes losses from foreign operations of $136,000 and $79,000 in 2021 and 2020, respectively. 

 

The net deferred tax assets/liabilities in the December 31, 2021 and 2020 consolidated balance sheets include the following components:

 

(in thousands)

 

2021

 

 

2020

 

Deferred tax assets:

 

 

 

 

 

 

Loss carryovers

 

$12,148

 

 

$12,636

 

Investment in Mineral Property

 

 

1,669

 

 

 

1,669

 

Capitalized Exploration Costs

 

 

418

 

 

 

410

 

Stock option compensation expense

 

 

309

 

 

 

286

 

Unrealized loss on derivative securities

 

 

98

 

 

 

148

 

Other

 

 

91

 

 

 

110

 

Lease Liability

 

 

18

 

 

 

-

 

Valuation allowance

 

 

(14,561)

 

 

(15,050)

Total deferred tax assets

 

 

190

 

 

 

209

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Unrealized gains on marketable equity securities

 

 

173

 

 

 

207

 

Lease Asset

 

 

17

 

 

 

-

 

Other

 

 

-

 

 

 

2

 

Total deferred tax liabilities

 

 

190

 

 

 

209

 

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)

 

2021

 

 

2020

 

Expected income tax benefit

 

$(497)

 

$(197)

Equity based compensation

 

 

4

 

 

 

7

 

Foreign tax rate differences

 

 

(12)

 

 

(8)

State income tax

 

 

(98)

 

 

(37)

Expiration of Capital Loss and Foreign Tax Credit Carryovers

 

 

1,385

 

 

 

1,225

 

Adjustment to Deferred Taxes

 

 

(114)

 

 

(23)

Change in valuation allowance

 

 

(489)

 

 

(949)

Change in Tax Rates

 

 

(194)

 

 

-

 

Permanent differences and other

 

 

15

 

 

 

(18)

Income tax (benefit) expense

 

$-

 

 

$-

 

 

            During 2021 and 2020, the valuation allowance decreased primarily due to the expiration of Capital Loss carryovers. 

 

            At December 31, 2021, Solitario has unused US Federal Net Operating Loss carryovers of $21,106,000 and unused US State Net Operating Loss carryovers of $22,974,000 which begin expiring in 2027.  As a result of the ownership change of Zazu Metals (Alaska) Corp, 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 $319,000 for US Federal and US State purposes which begin expiring in 2025. Solitario has Canadian loss carryforwards of $9,944,000 which begin expiring in 2027.  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.

 

            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, 2021 or December 31, 2020, 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, State of South Dakota, Canada and Peru.  Solitario’s United States federal, Canada and State of Alaska returns for years 2018 and forward and Solitario’s Peru and State of Colorado returns for tax years 2017 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, 2021, or December 31, 2020 or for the years then ended.