14.Income Taxes

The Company accounts for income taxes in accordance with the provisions of ASC 740 on a tax jurisdictional basis. The provision for income taxes consists of the following:


	For the Year Ended December 31,
	2017		2016
CURRENT TAXES:	(in thousands)
United States	$	—	$	—
Other Countries		13		—
	$	13	$	—
DEFERRED TAXES:
United States	$	—	$	—
Other Countries		—		—
Total income tax provision	$	13	$	—

Income (loss) from operations before income taxes by country consists of the following:


	For the Year Ended December 31,
	2017		2016
	(in thousands)
United States	$	(7,197)	$	(11,732)
Other Countries		3,318		1,073
	$	(3,879)	$	(10,659)

In 2017 the Company recorded $13,000 of current tax expense stemming from taxable income of a subsidiary in Mexico, and no current taxes were recorded in 2016. No deferred taxes were recorded in 2017 or 2016, as any such tax expense or benefit incurred during the year has been offset against a change in the valuation allowance of various deferred tax assets in each country.

A reconciliation of the provision for income taxes computed at the statutory rate to the provision for income taxes as shown in the Consolidated Statements of Operations and Comprehensive Loss is summarized below.


	For Year Ended December 31,
	2017		2016
	(in thousands)
Tax expense (benefit) at US rate of 35%	$	(1,319)	$	(3,624)
Other adjustments:
Rate differential of other jurisdictions		(70)		(98)
Effects of foreign earnings		310		(786)
Change in valuation allowance		33,975		(4,690)
Provision to tax return true-ups		(33,720)		209
Exchange rate changes on deferred tax assets		(8,444)		8,802
Effect of a change in tax rates		11,516		(1,177)
Debt extinguishment loss		—		550
Warrant liability loss		—		838
Tax loss on sale of subsidiary		(1,693)		—
Inflation adjustment on net operating losses		(2,491)		—
Expired net operating losses		1,931		—
Other		18		(24)
Income tax provision	$	13	$	—

The components of the deferred tax assets and deferred tax liabilities are as follows:


	For the year ended
	December 31,
	2017		2016
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	131,866	$	96,038
Stock-based compensation		517		1,435
Property, plant and equipment		4,307		7,545
Other		3,274		1,016
		139,964		106,034
Less: Valuation allowance		(139,795)		(105,820)
Total deferred tax assets		169		214

Deferred tax liabilities:
Property, plant and equipment		(169)		(195)
Other		—		(19)
Total deferred tax liabilities		(169)		(214)
Net deferred tax asset (liability)	$	—	$	—

In accordance with ASC 740, the Company presents deferred tax assets net of its deferred tax liabilities on a tax jurisdictional basis on its Consolidated Balance Sheets. The net deferred tax liability as of December 31, 2017 and December 31, 2016 was zero.

At the end of 2017 a new U.S. tax law was enacted, lowering the U.S. corporate tax rate to 21% from the top rate of 35% beginning in 2018. The tax rate change resulted in a reduction of the Company’s U.S. deferred tax assets by $10.2 million. The Company’s deferred tax assets are currently completely offset by a valuation allowance so the reduction in U.S. deferred tax assets has no impact on the Company’s financial statements for the year ended December 31, 2017. In addition, the new tax law imposes a transition tax on the accumulated earnings and profits of controlled foreign corporations (“CFC’s). None of the Company’s CFCs currently have accumulated earnings and profits and therefore the Company has no transition tax liability. No other provisions of the new tax law had a material impact on the Company’s financial statements for the period ended December 31, 2017. Based on the Company’s current interpretation and subject to the release of the related regulations and any future interpretive guidance, the Company believes the effects of the change in the tax law incorporated herein are substantially complete.

At December 31, 2017 the Company had net operating loss carryforwards in the U.S. and in certain non-U.S. jurisdictions totaling $484.9 million. Of these, $83.9 million is related to the Velardeña Properties in Mexico and expires in future years through 2027, $22.6 million is related to other Mexico exploration activities expiring in future years through 2027, $121.1 million exists in Spain and has no expiration date, and $186.5 million exists in other non-U.S. countries, which will expire in future years through 2027. In the U.S. there are $70.8 million of net operating loss carryforwards which will expire in future years through 2037.

The valuation allowance offsetting the net deferred tax assets of the Company of $139.8 million and $105.8 million at December 31, 2017 and 2016, respectively, relates primarily to the uncertain utilization of certain deferred tax assets, primarily net operating loss carryforwards, in various tax jurisdictions. 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.

The Company, a Delaware corporation, and its subsidiaries file tax returns in the United States and in various foreign jurisdictions. The tax rules and regulations in these countries are highly complex and subject to interpretation. The Company’s tax returns are subject to examination by the relevant taxing authorities and in connection with such examinations, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules within the country involved. In accordance with ASC 740, the Company identifies and evaluates uncertain tax positions, and recognizes the impact of uncertain tax positions for which there is less than a more-likely-than-not probability of the position being upheld upon review by the relevant taxing authority. Such positions are deemed to be “unrecognized tax benefits” which require additional disclosure and recognition of a liability within the financial statements. If recognized, none of the unrecognized tax benefits would affect the Company’s effective tax rate.

Below is a reconciliation of the beginning and ending amount of gross unrecognized tax benefits, which excludes any estimated penalties and interest on all identified unrecognized tax benefits. The Company’s unrecognized tax benefits as of December 31, 2017 and 2016 are completely offset by net deferred tax benefits and therefore do not appear on the Consolidated Balance Sheet.


	The Year Ended December 31,
	2017		2016
	(in thousands)
Gross unrecognized tax benefits at beginning of period	$	740	$	937
Increases for tax positions taken during prior years		—		—
Decreases relating to settlements with taxing authorities		—		—
Reductions due to lapse of statute of limitations		(154)		(197)
Gross unrecognized tax benefits at end of period	$	586	$	740

Tax years as early as 2012 remain open and are subject to examination in the Company’s principal tax jurisdictions. The Company does not expect a significant change to its net unrecognized tax benefits over the next 12 months. No interest and penalties were recognized in the Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2017 or 2016, and there were no interest and penalties recognized in the statement of financial position as of December 31, 2017 and 2016. The Company classifies income tax related interest and penalties as income tax expense.