McEwen Inc. Income Taxes Disclosure
NOTE 19 INCOME AND MINING TAXES
The Company’s income and mining tax (recovery) expense consisted of:
Year ended December 31, | |||||||||
| 2025 | | 2024 | | 2023 | ||||
State | $ | (859) | $ | 2,073 | $ | 971 | |||
Foreign | 1,314 | 2,231 | (4,107) | ||||||
Current tax (recovery) expense | $ | 455 | $ | 4,304 | $ | (3,136) | |||
Federal | $ | (22,222) | $ | — | $ | — | |||
State | 419 | (195) | — | ||||||
Foreign | (6,137) | (7,157) | 36,995 | ||||||
Deferred tax (recovery) expense | $ | (27,940) | $ | (7,352) | $ | 36,995 | |||
Federal | $ | (22,222) | $ | — | $ | — | |||
State | (440) | 1,878 | 971 | ||||||
Foreign | (4,823) | (4,926) | 32,888 | ||||||
Total income and mining tax (recovery) expense | $ | (27,485) | $ | (3,048) | $ | 33,859 | |||
The Company’s income (loss) before income and mining tax consisted of:
Year ended December 31, | |||||||||
2025 | | 2024 | 2023 | ||||||
United States | $ | 20,028 | $ | 6,130 | $ | (7,702) | |||
Foreign | (13,079) | (52,869) | 74,738 | ||||||
Income (loss) before income and mining taxes | $ | 6,949 | $ | (46,739) | $ | 67,036 | |||
The table below provides the updated requirements of ASU 2023-09 for 2025. The Company's income and mining tax expense (recovery) for the year ended December 31, 2025 differed from the amounts computed by applying the United States statutory corporate income tax rate for the following reasons:
Year ended December 31, 2025 | ||||||
Amount | Percent | |||||
Income before income and mining taxes | $ | 6,949 | ||||
U.S. Federal statutory tax rate | 1,459 | 21% | ||||
State and local income taxes, net of Federal income tax (1) | 1,296 | 19% | ||||
Foreign tax effects | 0% | |||||
Canada | ||||||
Adjustment for foreign tax rate | 2,562 | 37% | ||||
Adjustment for foreign provincial tax rate | (4,640) | (67)% | ||||
Change in valuation allowance | 12,248 | 176% | ||||
Canadian branch losses | (10,127) | (146)% | ||||
Equity loss from investments | 3,280 | 47% | ||||
Foregone interest | 915 | 13% | ||||
Realized flow-through expenditures | 5,483 | 79% | ||||
Realized flow-through premium | (5,649) | (81)% | ||||
Deferred mining tax expense net of income tax benefit | 672 | 10% | ||||
Withholding taxes | 342 | 5% | ||||
Foreign exchange on translation of books | (537) | (8)% | ||||
Adjustments in relation to prior years | (585) | (8)% | ||||
Other | (112) | (2)% | ||||
Argentina | ||||||
Adjustment for foreign tax rate | (60) | (1)% | ||||
Change in valuation allowance | 8 | 0% | ||||
Equity income from investments | (8,636) | (124)% | ||||
Non deductible interest | 1,772 | 26% | ||||
Effect of foreign exchange on translation of books and records | (1,382) | (20)% | ||||
Other | 57 | 1% | ||||
Mexico | ||||||
Adjustment for foreign tax rate | (997) | (14)% | ||||
Change in valuation allowance | 1,411 | 20% | ||||
Non deductible interest | 695 | 10% | ||||
Inflation adjustment on monetary assets | 738 | 11% | ||||
Effect of foreign exchange on translation of books and records | 372 | 5% | ||||
Other | 108 | 2% | ||||
Effect of changes in tax laws/rates enacted in the current period | 0% | |||||
Effect of cross-border tax laws | 931 | 13% | ||||
Tax credits | (74) | (1)% | ||||
Changes in valuation allowances | (30,209) | (435)% | ||||
Nontaxable or nondeductible items | 478 | 7% | ||||
Changes in unrecognized tax benefits | 695 | 10% | ||||
$ | (27,485) | (396)% | ||||
| (1) | State taxes are comprised entirely of Nevada Net Proceeds Tax, net of federal benefit. |
The Company’s effective tax rate of (396%) for the year ended December 31, 2025 is primarily attributable to the partial release of the valuation allowance on U.S. federal and certain state deferred tax assets. During 2025, the Company's valuation allowance decreased by $30.2 million after carefully evaluating all available positive and negative evidence in accordance with ASC 740. The positive evidence included sustained improvements in operating performance, continued profitability, and forecasted taxable income supported by the Company’s long‑term financial projections, despite historical operating losses in earlier periods. Management concluded that the positive evidence outweighs the negative evidence, and therefore determined that it is more likely than not that a portion of the Company’s U.S. deferred tax assets will be realized.The release of the valuation allowance resulted in a significant favorable impact on the Company’s effective tax rate for the period.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:
Year ended December 31, | ||||||
Expected tax expense at | | 2024 | | 2023 | ||
(Loss) income before income and mining taxes | $ | (46,739) | $ | 67,036 | ||
Statutory tax rate | 21% | 21% | ||||
US Federal and State tax (recovery) expense at statutory rate | (9,815) | 14,078 | ||||
Reconciling items: | ||||||
Equity loss from investments |
| 10,555 |
| 15,310 | ||
Deconsolidation of McEwen Copper Inc. |
| — |
| (46,644) | ||
Disposal of McEwen Copper Inc.'s shares |
| (1,531) | 6,179 | |||
Deferred tax liability on investment in associate |
| — | 38,340 | |||
Realized flow-through expenditures |
| 4,017 | 3,570 | |||
Realized flow-through premium |
| (2,304) | (3,423) | |||
Withholding tax |
| 426 | 632 | |||
Adjustment for foreign tax rates |
| (3,746) |
| (13,769) | ||
Permanent differences |
| (2,014) |
| 9,909 | ||
Foreign exchange on translation of books |
| (4,157) | 42 | |||
Losses expired |
| 3,330 | 8,282 | |||
Adjustments in relation to prior years |
| 367 | (629) | |||
Current and deferred mining tax liabilities |
| 2,283 | 1,455 | |||
Movement in valuation allowance |
| (505) | 821 | |||
Other |
| 46 | (294) | |||
(Loss) income and mining tax (recovery) expense | $ | (3,048) | $ | 33,859 | ||
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as at December 31, 2025 and 2024, respectively, are presented below:
Year ended December 31, | ||||||
| 2025 | | 2024 | |||
Deferred tax assets: | ||||||
Net operating loss carryforward | $ | 72,844 | $ | 61,135 | ||
Stock based compensation | 2,294 | — | ||||
Mineral properties |
| 46,290 |
| 52,228 | ||
Other temporary differences |
| 20,018 |
| 22,259 | ||
Total gross deferred tax assets |
| 141,446 |
| 135,622 | ||
Less: valuation allowance |
| (115,855) |
| (132,396) | ||
Net deferred tax assets | $ | 25,591 | $ | 3,226 | ||
Deferred tax liabilities: | ||||||
Unrealized loss | (642) | — | ||||
Acquired mineral property interests | (5,876) | (3,928) | ||||
Equity accounted investments |
| (29,600) |
| (32,881) | ||
Other taxable temporary differences | (4,210) | (3,047) | ||||
Total deferred tax liabilities | $ | (40,328) | $ | (39,856) | ||
Deferred income and mining tax liability | $ | (14,737) | $ | (36,630) | ||
The Company evaluates all available positive and negative evidence to determine whether it is more likely than not that sufficient future taxable income will be generated to realize its deferred tax assets. As the Company continues to experience sustained improvements in operating performance and forecasted taxable income in its U.S. operations, management concluded that it is more likely than not that a portion of its deferred tax assets will be realized. Accordingly, during 2025, the Company's valuation allowance related to its U.S. deferred tax assets decreased by $30.2 million.
With respect to foreign jurisdictions a significant piece of objective negative evidence evaluated was the recent pretax losses and/or expectations of future pretax losses. Such objective evidence limits the ability to consider other subjective evidence such as the Company's projections for future growth.
The table below summarizes changes to the valuation allowance:
Balance at | Balance at | |||||||||||
For the year ended December 31, | | beginning of year | Additions (1) | | Deductions (2) | | end of year | |||||
2025 | $ | 132,396 | $ | 13,668 | $ | (30,209) | $ | 115,855 | ||||
2024 | 130,002 | 2,780 | (386) | 132,396 | ||||||||
2023 | 149,342 | 3,391 | (22,731) | 130,002 | ||||||||
| (1) | The additions to valuation allowance mainly result from the Company and its subsidiaries incurring losses and exploration expenses for tax purposes that do not meet the more-likely-than-not criterion for recognition of deferred tax assets. |
| (2) | The reductions to valuation allowance mainly result from release of valuation allowance in the United States. |
As at December 31, 2025, 2024 and 2023, the Company did not have any income-tax related accrued interest and tax penalties.
The following table summarizes the Company’s losses that can be applied against future taxable profit:
Country | | Type of Loss | | Amount | | Expiry Period | |
United States (1) | Net operating losses | $ | 202,166 | 2027-Unlimited | |||
Mexico | Net operating losses | 59,631 | 2029-2034 | ||||
Canada (1) | Net operating losses | 47,864 | 2026-2045 | ||||
Argentina (1) | Net operating losses | 1 | 2030 | ||||
| (1) | The losses in the United States, Canada, and Argentina are part of multiple consolidating groups and, therefore, may be restricted in use to specific projects. |
Net cash paid for income taxes consisted of the following:
Year ended December 31, | |||
2025 | |||
State and local jurisdictions | |||
$ | 203 | ||
Canada - Ontario | 1,661 | ||
Other | 113 | ||
Total taxes paid | $ | 1,977 | |
The following table presents the changes in gross unrecognized tax benefits:
Year ended December 31, | |||||||||
2025 | 2024 | 2023 | |||||||
Unrecognized tax benefits - beginning of period | $ | — | $ | — | $ | — | |||
Additions for tax positions taken in prior years | 2,644 | — | — | ||||||
Lapses of applicable statues of limitations | (507) | — | — | ||||||
Total unrecognized tax benefits | $ | 2,137 | $ | — | $ | — | |||
If recognized, the balance of unrecognized tax benefits that would favorably affect the effective income tax rate would be $0.1 million.
The Company has not recognized an amount for interest and penalties in relation to the unrecognized tax benefit.
The Company or its subsidiaries file income tax returns in the United States, Canada, Mexico and Argentina. These tax returns are subject to examination by local taxation authorities provided the tax years remain open to audit under the relevant statute of limitations. The following summarizes the open tax years by major jurisdiction:
United States: 2020 to 2025
Canada: 2018 to 2025
Mexico: 2019 to 2025
Argentina: 2019 to 2025
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 17, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 14, 2023 | |
| 2021 | Mar 7, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.