NOTE 10 — INCOME TAXES

A reconciliation of the combined income taxes at the statutory rates and the Company’s effective income tax (benefit)/expense for 2019 is as follows:


	December 31,
	2019
Tax provision (benefits) computed at the statutory rate	$	(1,659)
Minority interest		4
State taxes		(26)
Rate change		456
Book expenses not deductible for tax purposes		19
Provision to return true-ups	$	—
State NOL true-up	$	(3,132)
Other true-ups	$	112
Change in valuation allowance	$	(4,226)
Income tax expense		—

During 2018, the change in valuation allowance was $2.2 million. There were no significant reconciling items between the Company’s tax provision (benefits) computed at the statutory rate and the change in valuation allowance for the year ended December 31, 2018.

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of our deferred tax assets and liabilities as at December 31 are as follows (in thousands):


	December 31,
	2019
Deferred tax assets:
Operating loss carry forward	$	62,480
Mineral properties		857
Share based compensation		823
Embedded derivatives		168
Other		15
Total deferred tax assets	$	64,343
Valuation allowance		(35,429)
Net Deferred tax assets		28,914

Deferred tax liabilities:
Investment in EMLLC	$	(28,654)
Senior convertible notes debt discount	$	(260)
Total deferred tax liabilities	$	(28,914)
Net deferred tax asset	$	—

At December 31, 2018, we had deferred tax assets principally arising from the net operating loss carry forwards for income tax purposes multiplied by an expected rate of 21%. The significant components of the deferred tax asset at December 31, 2018 was as follows (in thousands):


	December 31,
	2018
Operating loss carry forward	$	275,722
Unamortized exploration expense		4,489
Deductible stock based compensation		4,557
Other		93
Deductible temporary difference	$	284,861
Taxable temporary difference — Investment in EMLLC	$	(133,547)
Senior convertible notes debt discount		(2,424)
Net deductible temporary difference	$	148,890
Deferred tax asset	$	31,367
Deferred tax asset valuation allowance	$	(31,367)
Net deferred tax asset	$	—

We establish a valuation allowance against the deferred tax assets if, based on available information, it is more likely than not that all of the assets will not be realized. The valuation allowance of $35,429 and $31,267 at December 31, 2019 and 2018, respectively, relates mainly to net operating loss carryforwards where the utilization of such attributes is not more likely than not. The Company continually assesses both positive and negative evidence to determine whether it is more likely than not that deferred tax assets can be realized prior to their expiration.

As of December 31, 2019, the Company had federal net operating losses of $280 million. $261 million of the losses were generated before 2018 and expire in varying amounts in 2021-2037. Losses generated after 2017 of $19 million have an indefinite carryover period.

As of December 31, 2019 and 2018, the Company had no unrecognized tax benefits. There was no change in the amount of unrecognized tax benefits as a result of tax positions taken during the year or in prior periods or due to settlements with taxing authorities or lapses of applicable statues of limitations.

The Company and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. Without exception, the Company is no longer subject to U.S. Federal, state and local income tax examinations by tax authorities for years before 2014. The Company is open to federal and state tax audits until the applicable statutes of limitations expire.