RARE ELEMENT RESOURCES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars, except share and per share amounts, unless otherwise noted)
79
Our future tax assets and liabilities at December 31, 2014 and 2013 include the following components:
As of December 31,
As of December 31,
2014
2013
Deferred tax assets:
Current:
Accrued vacation
$ 39
$ 34
Reclamation provision
57
70
Derivative transactions
-
35
96
139
Non-Current:
Noncapital loss carryforwards, Canada
2,546
2,316
Capital loss carryforwards, Canada
7
3
Net operating loss carryforwards, U.S.
11,053
8,122
Mineral properties
14,244
13,421
Share issue costs
-
-
Reclamation provision
69
72
Equipment
115
74
Share based compensation
4,020
4,047
Research and development
1,882
1,186
Other
-
-
33,936
29,241
Deferred tax assets
34,032
29,380
Valuation allowance
(34,032)
(29,380)
Net
$ -
$ -
Deferred tax liabilities:
Non-Current:
Other
-
-
Deferred tax liabilities
-
-
Net deferred tax asset/(liability)
-
-
The composition of our valuation allowance by tax jurisdiction is summarized as follows:
As of December 31,
2014
2013
Canada
$ 3,055
$ 2,756
United States
30,977
26,624
Total valuation
allowance
$ 34,032
$ 29,380
The valuation allowance increased $4,652 from the period ended December 31, 2013 to the calendar year ended
December 31, 2014 and $6,452 from the fiscal year ended December 31, 2012 to the period ended December 31,
2013. This was the result of an increase in the net deferred tax assets, primarily net operating loss carryforwards
("NOLs"), equity compensation for U.S. residents, exploration spending on mineral properties, research and
experimental spending, and change in tax rates. 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, 2014, we had U.S. net operating loss carryforwards of approximately $34,486, which expire from
2018 to 2034. In addition, we had Canadian non-capital loss carryforwards of approximately CDN$9,792, which
expire from 2015 to 2034. As of December 31, 2014, there were Canadian capital loss carryforwards of CDN$59.
A full valuation allowance has been recorded against the tax effected U.S. and Canadian loss carryforwards as we do
not consider realization of such assets to meet the required 'more likely than not' standard.
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. No Section 382 study has been completed; therefore, the actual usage of U.S. net
operating loss carryforwards has not been determined.
