Note

Income Taxes

Major components of our income tax (provision) benefit for the years ended

December

31,

2016,

2015

and

2014

are as follows (in thousands):

	2016			2015			2014
Current:
Domestic	$	(10,702	)	$	3,892		$	7,761
Foreign		(13,713	)		(5,376	)		(619	)
Total current income tax (provision) benefit		(24,415	)		(1,484	)		7,142
Deferred:
Domestic		7,480			(75,456	)		(1,572	)
Foreign		(10,493	)		20,630			(330	)
Total deferred income tax (provision) benefit		(3,013	)		(54,826	)		(1,902	)
Total income tax benefit (provision)	$	(27,428	)	$	(56,310	)	$	5,240

Domestic and foreign components of (loss) income before income taxes for the years ended

December

31,

2016,

2015

and

2014

are as follows (in thousands):

	2016		2015			2014
Domestic	$	41,014	$	(65,895	)	$	(1,505	)
Foreign		55,961		35,237			14,089
Total	$	96,975	$	(30,658	)	$	12,584

The annual tax (provision) benefit is different from the amount that would be provided by applying the statutory federal income tax rate to our pretax (loss) income. The reasons for the difference are (in thousands):

	2016					2015					2014
Computed “statutory” benefit (provision)	$	(33,941	)	35	%	$	10,731		35	%	$	(4,405	)	35	%
Percentage depletion		8,114		(8	)		2,432		8			6,034		(48	)
Change in valuation allowance		11,336		(12	)		(84,951	)	(277	)		(6,314	)	50
State taxes, net of federal taxes		(565	)	1			(3,639	)	(12	)		1,671		(13	)
Foreign currency remeasurement of monetary assets and liabilities		(4,598	)	5			28,184		92			16,368		(130	)
Rate differential on foreign earnings		(6,853	)	7			(4,746	)	(15	)		(5,938	)	47
Compensation		(1,311	)	1			(815	)	(3	)		(1,308	)	10
Other		390		(1	)		(3,506	)	(12	)		(868	)	7
Total	$	(27,428	)	28	%	$	(56,310	)	(184	)%	$	5,240		(42	)%

We evaluated the positive and negative evidence available to determine the amount of valuation allowance required on our deferred tax assets. At

December

31,

2016

and

2015,

the balances of our valuation allowances were approximately

$100

million and

$116

million, respectively, primarily related to net operating losses and tax credit carryforwards. The amount of the deferred tax asset considered recoverable, however, could be reduced in the near term if estimates of future taxable income are reduced.

December

31,

2016

and

2015,

the net deferred tax liability was approximately

$87

million and

$66

million, respectively. The individual components of our net deferred tax assets and liabilities are reflected in the table below (in thousands).

	December 31,
	2016			2015
Deferred tax assets:
Accrued reclamation costs	$	30,188		$	26,473
Deferred exploration		26,785			29,120
Foreign net operating losses		1,058			21,140
Domestic net operating losses		82,359			82,116
AMT credit carryforwards		20,405			11,607
Pension and benefit obligation		18,115			18,916
Foreign exchange loss		34,977			38,779
Foreign tax credit carryforward		7,283			6,692
Miscellaneous		30,166			27,205
Total deferred tax assets		251,336			262,048
Valuation allowance		(99,602	)		(115,806	)
Total deferred tax assets		151,734			146,242
Deferred tax liabilities:
Miscellaneous		(3,046	)		(2,394	)
Properties, plants and equipment		(235,700	)		(209,577	)
Total deferred tax liabilities		(238,746	)		(211,971	)
Net deferred tax liability	$	(87,012	)	$	(65,729	)

We plan to permanently reinvest earnings from foreign subsidiaries, with the exception of Hecla Quebec Inc., our wholly-owned subsidiary which owns our Casa Berardi mine and other interests in Quebec, Canada, and Minera Hecla, our wholly-owned subsidiary which owns our San Sebastian mine and other interests in Durango, Mexico. For the years

2016,

2015

and

2014,

we had

unremitted foreign earnings. Foreign net operating losses carried forward are shown above as a deferred tax asset, with a partial valuation allowance as discussed below.

We recorded a valuation allowance to reflect the estimated amount of deferred tax assets, which

may

not be realized principally due to the forecasted expiration of net operating losses and tax credit carryforwards. A portion of the valuation allowance relating to foreign net operating loss carryforwards was released in

2015

as we determined that it was more likely than not that a portion of the benefit of the net operating loss carryforwards would be realized as a result of operating activities at San Sebastian. There was also significant utilization of deferred tax assets in the U.S. and Mexico. As of

December

31,

2016,

$96

million valuation allowance remains in U.S. jurisdictions,

million in Hecla Canada Limited and

million in Minera Hecla S.A. de C.V. There is

valuation allowance at Hecla Quebec, Inc. The changes in the valuation allowance for the years ended

December

31,

2016,

2015

and

2014,

are as follows (in thousands):

	2016			2015			2014
Balance at beginning of year	$	(115,806	)	$	(32,094	)	$	(27,155	)
Increase related to non-utilization of net operating loss carryforwards and non-recognition of deferred tax assets due to uncertainty of recovery		(2,868	)		(92,393	)		(6,314	)
Decrease related to utilization and expiration of deferred tax assets, other		19,072			8,681			1,375
Balance at end of year	$	(99,602	)	$	(115,806	)	$	(32,094	)

As of

December

31,

2016,

for U.S. income tax purposes, we have federal and state net operating loss carryforwards of

$244

million and

$84

million, respectively. These net operating loss carryforwards have a

year expiration period, the earliest of which could expire in

2020.

We have foreign and provincial net operating loss carryforwards of approximately

million each, which expire between

2017

and

2036.

We have approximately

$20

million in alternative minimum tax credit carryforwards which do not expire and are eligible to reduce future U.S. tax liabilities. Our utilization of U.S. net operating loss carryforwards

may

be subject to annual limitations if there is a change in control as defined under Internal Revenue Code Section

382.

December

31,

2016

and

2015

we had

$22

million and

$20

million, respectively, of federal net operating loss carryovers relating to excess tax benefits from the exercise of employee stock options and the vesting of restricted stock awards. These amounts are not reflected in our deferred tax asset for net operating loss carryovers. We recognize the excess tax benefits from the exercise of employee stock options and the vesting of restricted stock awards in the period in which these tax benefits reduce income taxes payable, after net operating loss carryforwards are fully utilized.

We file income tax returns in the U.S. federal jurisdiction, various state and foreign jurisdictions. We are no longer subject to income tax examinations by U.S. federal and state tax authorities for years prior to

2000,

or examinations by foreign tax authorities for years prior to

2010.

We currently have no tax years under examination.

We had

unrecognized tax benefits as of

December

31,

2016

2015.

Due to the net operating loss carryover provision, coupled with the lack of any unrecognized tax benefits, we have not provided for any interest or penalties associated with any uncertain tax positions. If interest and penalties were to be assessed, our policy is to charge interest to interest expense, and penalties to other operating expense. It is not anticipated that there will be any significant changes to unrecognized tax benefits within the next

months.

As discussed in

Note

, we acquired Mines Management, Inc. in

September

2016.

In accounting for this acquisition, we adopted a policy to consider the recoverability of deferred tax assets acquired in the acquisition before considering the recoverability of the acquirer’s existing deferred tax assets.