Federal Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Federal Income Taxes

11. FEDERAL INCOME TAXES

The Company recognizes future tax assets and liabilities for each tax jurisdiction based on the difference between the financial reporting and tax bases of assets and liabilities using the enacted tax rates expected to be in effect when the taxes are paid or recovered. A valuation allowance is provided against net future tax assets for which the Company does consider the realization of such assets to meet the required “more likely than not” standard.

The Company’s future tax assets and liabilities at December 31, 2016 and 2015 include the following components:

	December 31,
	2016	2015
Deferred tax assets:
Non-Current:
Net operating loss carryforwards	$                 85,995	$             80,491
Mineral properties	11,608	13,970
Capital loss carryforwards	618	618
Restoration reserves	1,623	1,478
Capitalized transaction costs	1,140	1,145
Other	5,562	946
Deferred tax assets	106,546	98,648
Valuation allowance	(101,523)	(96,203)
Net deferred tax assets	5,023	2,445
Deferred tax liabilities:
Current:
Prepaids and other	70	68
	70	68
Non-Current:
Derivatives	(956)	(956)
Property, plant and equipment	(4,137)	(1,557)
Deferred tax liabilities	(5,093)	(2,513)
Net deferred tax asset (liability)	$ -	$ -

The composition of our valuation allowance by tax jurisdiction is summarized as follows:

	December 31,
	2016	2015
United States	$             92,448	$           87,304
Australia	11,113	11,066
Turkey	(2,038)	(2,167)
Total valuation allowance	$          101,523	$           96,203

The valuation allowance increased $5.3 million from the year ended December 31, 2015 to the year ended December 31, 2016. This was the result of an increase in the net deferred tax assets, primarily net operating loss carryforwards (“NOLs”), equity based compensation and exploration spending on mineral properties. Because we are unable to determine whether it is more likely than not that the net deferred tax assets will be realized, we continue to record a 100% valuation against the net deferred tax assets.

At December 31, 2016, we had U.S. net operating loss carryforwards of approximately $235.1 million, which expire from 2018 to 2036. This included approximately $32.8 million in net operating loss carryforwards associated with the Neutron merger. In addition, at December 31, 2016 we had Australian net operating loss carryforwards of $14.1 million, including approximately $13.3 million associated with the Anatolia Transaction, which are available indefinitely, subject to continuing to meet relevant statutory tests, and net operating loss carryforwards in Turkey of approximately $1.8 million, which expire from 2017 to 2020.

Section 382 of the Internal Revenue Code could apply and limit our ability to utilize a portion of the U.S. net operating loss carryforwards. Following the issuance of the Company’s Common Stock in 2001, the Neutron merger in 2012 and the Anatolia Transaction in 2015, the ability to utilize the net operating loss carryforwards will be severely limited on an annual and aggregate basis. A formal Section 382 study has not been completed, therefore the actual usage of US net operating loss carryforwards has not been determined. Similar limitations apply to the state net operating loss carryforwards related to the Neutron acquisition.

For financial reporting purposes, loss from operations before income taxes consists of the following components:

	For the calendar year ended December 31,
	2016	2015
United States	$               (18,798)	$          (14,858)
Australia	(158)	(76)
Turkey	(649)	(209)
	$               (19,605)	$          (15,143)

A reconciliation of expected income tax on net income at statutory rates is as follows:

	Year ended December 31,
	2016	2015
Net loss	$          (19,605)	$         (15,143)
Statutory tax rate	34%	34%
Tax recovery at statutory rate	(6,666)	(5,149)
Foreign tax rate	97	(33)
Mineral property adjustments	9	(2,394)
Foreign deferred costs and other adjustments	-	(800)
Operating loss carryforward adjustment	(10)	(5,488)
Nondeductible write-offs	1,250	96
Change in valuation allowance	5,320	13,768
Income tax expense (recovery)	$                      -	$                     -

We do not have any uncertain tax positions. Should we incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of the interest expense and operating expense, respectively.

Uranium Resources, Inc., and its wholly owned subsidiaries, files in the U.S. federal jurisdiction and various state jurisdictions. Anatolia Energy Limited and Anatolia Uranium Pty Ltd file in the Australian jurisdiction and Adur Madencilik files in the Turkish jurisdiction.

The years still open for U.S. audit are generally the current year plus the previous three. However, because we have NOLs carrying forward, certain items attributable to closed tax years are still subject to adjustment by applicable taxing authorities through an adjustment to tax losses carried forward to open years.