12.Income Taxes

 

A reconciliation of income taxes at the statutory Canadian income tax rate to net income taxes included in the accompanying statements of operations is as follows:

 

 

Deferred tax assets and liabilities reflect the net tax effects of net operating losses, credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. The components of the Company’s deferred tax assets and liabilities are as follows:

 

 

Based upon the level of historical taxable loss, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences and accordingly has established a full valuation allowance as of December 31, 2015 and 2014.  No deferred tax assets are therefore recognized at this point.

 

 

In 2013, we acquired Pathfinder as a corporate entity.  In terms for the acquisition, there were no net operating losses or other tax attributes that carried forward to the Company with the acquisition.  In addition, the assets acquired had no tax basis within the corporation.  The seller also did not make the Sec. 338(h)(10) election to allow us to push the purchase price down to the asset level for tax purposes.  As a result, it was determined that the acquisition should not treated as a business combination since Pathfinder was not a going concern.  A tax of $3.3 million was calculated as a potential liability of the acquisition and was recorded as a deferred tax liability and an increase in basis.  For accounting/reporting purposes, this value was added to the accounting basis in the assets acquired.  In addition, it was determined for the 2013 financials that the deferred tax liability (“DTL”) should not be netted with the company’s other deferred tax assets (“DTA”) and offset with the valuation allowance (“VA”) because at the time it could not be determined if the losses in Ur-Energy could safely be applied to reduce the Pathfinder DTL and the amount was determined to be indefinite lived.

 

In early 2015, we completed and filed the Shirley Basin PEA based on drilling data purchased as a part of the acquisition combined with gathered during the exploration / confirmation program undertaken in 2014.  After filing the Shirley Basin PEA, we have continued to do baseline and confirmation work at Shirley Basin and in late 2015 we submitted a permit application to the state of Wyoming to begin construction and operations at the project.  In early 2016, we anticipating filing the federal permit application with the Nuclear Regulatory Commission.

 

The current income tax accrual and related expense is due to federal alternative minimum tax which limits the amount of net operating loss.

 

As of December 31, 2015, the Company had the following net operating loss carryforwards available:

 

 

The Company follows a comprehensive model for recognizing, measuring, presenting and disclosing uncertain tax positions taken or expected to be taken on a tax return. Tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

The Company currently has no uncertain tax positions and is therefore not reflecting any adjustments for such in its deferred tax assets.

 

There are open statutes of limitations for tax authorities in the U.S., Canada and state jurisdictions to audit the Company’s tax returns for the years ended December 31, 2012, 2013 and 2014.

 

The Company’s policy is to account for income tax related interest and penalties in income tax expense in the accompanying statements of operations. There have been no income tax related interest or penalties assessed or recorded.

 

Other comprehensive loss was not subject to income tax effects and is therefore shown net of taxes.