Note 3 - Income Taxes

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

3.

   Income Taxes

Major components of our income tax provision for the

three

months ended

March

31,

2017

and

2016

are as follows (in thousands):

	Three Months Ended
	March 31,
	2017			2016
Current:
Domestic	$	(12,797	)	$	(2,506	)
Foreign		5,515			1,015
Total current income tax benefit		(7,282	)		(1,491	)
Deferred:
Domestic		(18,903	)		588
Foreign		(2,886	)		2,557
Total deferred income tax (benefit) provision		(21,789	)		3,145
Total income tax (benefit) provision	$	(29,071	)	$	1,654

As of

March

 

31,

2017,

we have a net deferred tax asset in the U.S. of

$48.4

million and a net deferred tax liability in Canada of

$121.0

million, for a consolidated worldwide net deferred tax liability of

$72.6

million. Our ability to utilize our deferred tax assets depends on future taxable income generated from operations and various tax planning strategies. In the

first

quarter of

2017,

we received consent from the Internal Revenue Service to permit us to take a different income tax position relating to the timing of deductions for the

#4

Shaft development costs at Lucky Friday. This tax accounting method change substantially revised the timing of deductions for these costs for regular tax and Alternative Minimum Tax ("AMT") relative to our projected life of mine and projected taxable income. These timing changes caused us to revise our assessment of the ability to generate sufficient future taxable income to realize our deferred tax assets, resulting in a valuation allowance release of approximately

$15

million.  At

March

 

31,

2017

and

December

 

31,

2016,

the balances of the valuation allowances on our deferred tax assets were approximately

$81

million and

$100

million, respectively, primarily for 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.

The current income tax provisions for the

three

months ended

March

 

31,

2017

and

2016

vary from the amounts that would have resulted from applying the statutory income tax rate to pre-tax income due primarily to the impact of the change in accounting method treatment of the

#4

Shaft development costs described above, as well as the effects of percentage depletion and the impact of taxation in foreign jurisdictions.