Note 3 - Income Taxes

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 3. Income Taxes

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

three

and

six

months ended

June 30, 2017

and

2016

are as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Current:
Domestic	$	—		$	2,506		$	(12,798	)	$	—
Foreign		15,935			1,627			21,451			2,642
Total current income tax provision (benefit)		15,935			4,133			8,653			2,642
Deferred:
Domestic		2,965			8,777			(15,939	)		9,365
Foreign		(2,805	)		(1,414	)		(5,690	)		1,143
Total deferred income tax benefit		160			7,363			(21,629	)		10,508
Total income tax provision (benefit)	$	16,095		$	11,496		$	(12,976	)	$	13,150

As of

June 

30,

2017,

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

$44.6

million and a net deferred tax liability in Canada of

$121.2

million, for a consolidated worldwide net deferred tax liability of

$76.6

million. Our ability to utilize our deferred tax assets depends on future taxable income generated from operations. 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

June 

30,

2017

and

December 

31,

2016,

the balance of the valuation allowances on our deferred tax assets was

$83

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 (benefits) for the

three

and

six

months ended

June 

30,

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

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Shaft development costs described above, the impact of taxation in foreign jurisdictions, and the Company's status as an indefinite AMT taxpayer.