Entity information:
INCOME AND MINING TAXES
The components of Income (loss) before income taxes are below:
 
Year ended December 31,
In thousands
2017
 
2016
 
2015
United States
$
10,099

 
$
(13,299
)
 
$
(44,101
)
Foreign
29,824

 
2,487

 
(272,785
)
Total
$
39,923

 
$
(10,812
)
 
$
(316,886
)

The components of the consolidated Income and mining tax (expense) benefit from continuing operations are below:
 
Year ended December 31,
In thousands
2017
 
2016
 
2015
Current:
 

 
 

 
 

United States
$
1,428

 
$
—

 
$
49

United States — State mining taxes
(6,016
)
 
(7,826
)
 
(4,305
)
United States — Foreign withholding tax
(8,466
)
 
(1,838
)
 
—

Argentina
55

 
10

 
715

Australia
—

 
14

 
130

Canada
876

 
(1,841
)
 
(516
)
Mexico
(30,763
)
 
(9,581
)
 
(476
)
Deferred:
 
 
 
 
 
United States
6,367

 
(1,610
)
 
(564
)
United States — State mining taxes
1,052

 
748

 
1,952

Argentina
1,531

 
115

 
(1,197
)
Australia
—

 
(1,638
)
 
3,223

Canada
104

 
1,338

 
2,875

Mexico
4,805

 
55,383

 
27,189

New Zealand
29

 
(27
)
 
—

Income tax (expense) benefit
$
(28,998
)
 
$
33,247

 
$
29,075


The Company’s effective tax rate is impacted by recurring items, such as foreign exchange rates on deferred tax balances, mining tax expense, full valuation allowance on the deferred tax assets relating to losses in the United States and certain foreign jurisdictions, and uncertain tax positions. During the year ended December 31, 2016, the Company completed a legal entity reorganization to integrate recent acquisitions resulting in a valuation allowance release of $40.8 million. In addition, the Company’s consolidated effective income and mining tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in our consolidated effective tax rate.
    








A reconciliation of the Company’s effective tax rate with the federal statutory tax rate for the periods indicated is below:
 
Year ended December 31,
In thousands
2017
 
2016
 
2015
Income and mining tax (expense) benefit at statutory rate
$
(14,037
)
 
$
3,718

 
$
110,848

State tax provision from continuing operations
26

 
336

 
(2,075
)
Change in valuation allowance
86,712

 
40,517

 
(70,457
)
Effect of tax legislation
(88,174
)
 
—

 
—

Percentage depletion
703

 
983

 
—

Uncertain tax positions
2,596

 
(8,829
)
 
170

U.S. and foreign permanent differences
2,348

 
(2,652
)
 
(3,376
)
Mineral interest related
—

 
—

 
(18,318
)
Foreign exchange rates
(14,180
)
 
19,701

 
21,461

Foreign inflation and indexing
(2,346
)
 
(670
)
 
1,117

Foreign tax rate differences
2,929

 
120

 
(14,062
)
Mining, foreign withholding, and other taxes
(11,274
)
 
(11,052
)
 
8,141

Other, net
5,699

 
—

 
(4,374
)
Legal entity reorganization
—

 
(8,925
)
 
—

Income and mining tax (expense) benefit
$
(28,998
)
 
$
33,247

 
$
29,075


At December 31, 2017 and 2016, the significant components of the Company’s deferred tax assets and liabilities are below:
 
Year ended December 31,
In thousands
2017
 
2016
Deferred tax liabilities:
 

 
 

Mineral properties
$
143,773

 
$
60,199

Unrealized foreign currency loss and other
1,748

 
—

Inventory
8,258

 
4,629

Royalty and other long-term debt
—

 
8,685

 
$
153,779

 
$
73,513

Deferred tax assets:
 

 
 

Net operating loss carryforwards
$
155,512

 
$
186,005

Property, plant, and equipment
60,286

 
60,828

Mining Royalty Tax
11,797

 
6,359

Capital loss carryforwards
19,881

 
6,770

Asset retirement obligation
25,309

 
26,951

Foreign subsidiaries - unremitted earnings
1,842

 
3,685

Unrealized foreign currency loss and other
218

 
7,413

Accrued expenses
13,512

 
15,193

Tax credit carryforwards
45,277

 
29,227

 
333,634

 
342,431

Valuation allowance
(282,868
)
 
(338,539
)
 
50,766

 
3,892

Net deferred tax liabilities
$
103,013

 
$
69,621





A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see the section titled “Risk Factors” included in Item 1A. Based upon this analysis, the Company has recorded valuation allowances as follows:
 
Year ended December 31,
In thousands
2017
 
2016
U.S. 
$
235,395

 
$
292,446

Argentina
3,914

 
6,197

Canada
2,455

 
1,296

Mexico
17,087

 
13,033

New Zealand
23,792

 
23,717

Other
225

 
1,850

 
$
282,868

 
$
338,539


The Company has the following tax attribute carryforwards at December 31, 2017, by jurisdiction:
In thousands
U.S.
 
Canada
 
Mexico
 
New Zealand
 
Other
 
Total
Regular net operating losses
$
369,973

 
$
39,833

 
$
56,958

 
$
86,165

 
$
12,436

 
$
565,365

Expiration years
2019-2037
 
2029-2036
 
2017-2026
 
Indefinite
 
2017-2021
 
 
Alternative minimum tax net operating losses
179,882

 
—

 
—

 
—

 
—

 
179,882

Capital losses
72,772

 
14,018

 
—

 
—

 
—

 
86,790

Alternative minimum tax credits
1,654

 
—

 
—

 
—

 
—

 
1,654

Foreign tax credits
41,730

 
—

 
—

 
—

 
—

 
41,730


The majority of the U.S. capital losses will expire from 2020 through 2022. Alternative minimum tax credits do not expire and foreign tax credits expire if unused beginning in 2019.
The Company intends to indefinitely reinvest earnings from Mexican operations.
A reconciliation of the beginning and ending amount related to unrecognized tax benefits is below (in thousands):
Unrecognized tax benefits at December 31, 2015
$
2,131

Gross increase to current period tax positions
239

Gross increase to prior period tax positions
5,187

Reductions in unrecognized tax benefits resulting from a lapse of the applicable statute of limitations
(400
)
Unrecognized tax benefits at December 31, 2016
$
7,157

Gross increase to current period tax positions
202

Gross increase to prior period tax positions
316

Reductions in unrecognized tax benefits resulting from a lapse of the applicable statute of limitations
(2,351
)
Unrecognized tax benefits at December 31, 2017
$
5,324


At December 31, 2017, 2016, and 2015, $4.3 million, $5.1 million, and $1.2 million, respectively, of these gross unrecognized benefits would, if recognized, decrease the Company’s effective tax rate.
The Company operates in numerous countries around the world and is subject to, and pays annual income taxes under, the various income tax regimes in the countries in which it operates. The Company has historically filed, and continues to file, all required income tax returns and paid the taxes reasonably determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time, the Company is subject to a review of its historic income tax filings and, in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company’s business conducted within the country involved.
The Company files income tax returns in various U.S. federal and state jurisdictions, in all identified foreign jurisdictions, and various others. The statute of limitations remains open from 2014 for the US federal jurisdiction and from 2008 for certain other foreign jurisdictions. As a result of statutes of limitations that will begin to expire within the next 12 months in various jurisdictions and possible settlement of audit-related issues with taxing authorities in various jurisdictions with respect to which none of these issues are individually significant, the Company believes that it is reasonably possible that the total amount of its unrecognized income tax liability will decrease between $1.5 million and $2.5 million in the next 12 months.
The Company classifies interest and penalties associated with uncertain tax positions as a component of income tax expense and recognized interest and penalties of $4.8 million, $5.5 million, and $0.7 million at December 31, 2017, 2016, and 2015, respectively.
On December 22, 2017, the United States (“U.S.”) enacted significant changes to U.S. tax law following the passage and signing of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” which makes widespread changes to the Internal Revenue Code, including, among other items, a reduction in the federal corporate tax rate to 21%, effective January 1, 2018.
The Company is subject to the provisions of the Financial Accounting Standards Board (“FASB”) ASC 740-10, Income Taxes, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate change was enacted. The carrying value of our U.S. deferred taxes is determined by the enacted U.S. corporate income tax rate. Consequently, the reduction in the U.S. corporate income tax rate impacts the carrying value of our deferred tax assets. Under the new corporate income tax rate of 21%, the U.S. net deferred tax asset position will decrease as will the related valuation allowance. The net effect of the tax reform enactment on the financial statements is minimal.
While there are certain aspects of the new tax law that will not impact the Company based on its tax attributes, such as the one-time transition tax on unremitted foreign earnings; there are other aspects of the law, which could have a positive impact on the Company’s future U.S. income tax expense, including the elimination of the U.S. corporate alternative minimum tax. However, uncertainty regarding the impact of tax reform remains, as a result of factors including future regulatory and rulemaking processes, the prospects of additional corrective or supplemental legislation, potential trade or other litigation, and other factors.