Entity information:

NOTE 7 – INCOME TAXES

The Company’s net deferred tax assets consisted of the following:

      December 31,  
      2017     2016  
  Long-term deferred tax assets:            
         Net operating loss carry forward $ 25,346,000   $ 35,893,000  
         Stock based compensation   766,000     1,052,000  
         Tax credit carryforward and other   174,000     156,000  
               
  Long-term deferred tax liabilities:            
         Depreciation and amortization   (19,803,000 )   (28,755,000 )
  Total deferred tax assets   6,483,000     8,346,000  
         Less: valuation allowance   -     -  
  Net deferred income tax assets $ 6,483,000   $ 8,346,000  

Income before income taxes consists of the following:

      For the Year ended December 31,  
      2017     2016     2015  
                     
  United States $ 1,577,975   $ 4,335,369   $ 6,543,299  
  Foreign   (166,414 )   (175,021 )   (206,801 )
      1,411,561     4,160,348     6,336,498  
  Income attributable to non-controlling interests   (1,816,542 )   (3,122,017 )   (3,103,269 )
  Income (loss) attributable to U.S. Geothermal Inc. $ (404,981 ) $ 1,038,331   $ 3,233,229  

The Company’s estimated effective income tax rates are as follows:

      For the Year Ended December 31,  
      2017     2016     2015  
  U.S. Federal statutory rate   34.0%     34.0%     34.0%  
  Average State and foreign income tax, net of federal tax effect   0.8     1.2     3.5  
  Impact of tax reform   291.5     0.0     0.0  
  Impact of state deferred rate decrease   (141.9 )   (3.0 )   0.0  
  Stock based compensation   (16.0 )   7.8     0.0  
  Other   7.6     (0.6 )   (0.0 )
           Consolidated tax rate before non-controlling interest   176.0     39.4     37.5  
  Tax effect of non-controlling interests   (43.8 )   (25.5 )   (18.4 )
           Net effective tax rate   132.2%     13.9%     19.1%  

The provision (benefit) for income taxes consists of the following:

      For the Year Ended December 31,  
      2017     2016     2015  
  Current:                  
         United States $ 3,000   $   -   $   -  
         Foreign   -     -     -  
      3,000     -     -  
  Deferred:                  
         United States   1,860,000     575,000     1,386,000  
         Foreign   -     -     -  
  Provision from income taxes $ 1,863,000   $ 575,000   $ 1,386,000  

The Tax Cuts and Jobs Act was enacted on December 22, 2017. The Company’s evaluation of the accounting elements of the Tax Act is complete and its impact is reflected in our 2017 financial statements. The Act reduces the US federal corporate tax rate from 34% to 21% beginning in 2018. The impact of the Act for the Company is $4.1 million reduction in the Company's net deferred tax asset to reflect the new statutory rate.

The provision for income taxes reflects an estimated effective income tax rate attributable to U.S. Geothermal Inc.’s share of income. Our provision for income taxes for the year ended December 31, 2017, reflects a reported effective tax rate of 132.2% which differs from the statutory federal income tax rate of 34.0% primarily due to the impact of the tax reform, non-controlling interest, stock based compensation and state income taxes.

At December 31, 2017, the Company had federal net operating loss carry forwards of approximately $109 million and state net operating loss carry forwards of approximately $44 million, which expire in the years 2023 through 2037. Approximately $104 million of the operating losses were generated by the Company, the residual originated from acquired subsidiaries.

In 2014, the Company purchased a group of companies. Federal and applicable state net operating losses that totalled approximately $5.8 million were included in the acquisition. These NOLs are scheduled to expire in the years ending 2024 through 2034. The use of these net operating losses is restricted by the Company’s basis (acquisition price) and the “applicable federal rate” as defined by Section 382 of federal tax law. The estimated available net operating losses from the acquired companies were approximately $5,189,000 at December 31, 2017.

Accounting for Income Tax Uncertainties and Related Matters
The Company files income tax returns in the U.S. federal jurisdiction and in the States of Idaho, California and Oregon. These filings are generally subject to a three year statute of limitations, but do remain open to Internal Revenue Service adjustments for net operating loss carry forward. No filings are currently under examination.

The Company currently does not have any uncertain tax positions to disclose. In the event that the Company is assessed interest or penalties on uncertain tax positions at some point in the future, it will be classified in the financial statements as tax expense.