BPZ Resources, Inc. - Shareholder.com

The income tax provision (benefit) for the year ended December 31, consists of the following (in thousands)
50
2010 2009 2008
Current Taxes
Federal .................................................................................................. $ (200) $ 200 $ —
Foreign.................................................................................................. 2,151 6,709 7,536
Total Current............................................................................................. 1,951 6,909 7,536
Deferred Taxes
Federal .................................................................................................. $ — $ — $ —
Foreign.................................................................................................. (13,559) (13,484) (4,395)
Total Deferred................................................................................... (13,559) (13,484) (4,395)
Total Income Tax Provision (Benefit) ...................................................... $ (11,608) $ (6,575) $ 3,141
The income tax expense (benefit) for the year ended December 31, 2010, 2009 and 2008 differs from the amount computed
by applying the U.S. statutory federal income tax rate for the applicable year to consolidated net loss before income taxes as follows
(in thousands):
2010 2009 2008
Federal statutory income tax rate.............................................................. $ (24,269) $ (14,408) $ (2,212)
Increases (decreases) resulting from: — — —
Peruvian income tax - rate difference less than 34% statutory ......... 5,763 — —
Non-deductible stock compensation expense ................................... (365) 2,908 6,551
Non-deductible intercompany expenses and other ........................... (2,922) 4,180 —
Tax effect of Peru conversion to permanent establishment status .... — — 7,642
Change in domestic valuation allowance.......................................... 10,185 745 (8,840)
Total Income Tax Provision (Benefit) .......................................... $ (11,608) $ (6,575) $ 3,141
A summary of the components of deferred tax assets, deferred tax liabilities and other taxes deferred at December 31, 2010
and 2009 are presented below (in thousands):
2010 2009
Deferred Tax:
Asset:
Net Operating Loss ............................................................................ $ 27,039 $ 16,546
Deferred Compensation ..................................................................... 2,658 2,514
Foreign Tax AMT .............................................................................. 3,535 1,647
Exploration Expense .......................................................................... 10,720 7,256
Depletion............................................................................................ 9,148 8,162
Asset Retirement Obligation .............................................................. 105 67
Overhead Allocaion to Foreign Locations ......................................... 6,326 2,298
Other .................................................................................................. 681 119
Liability:
Preoperation Expenses ....................................................................... (275) (295)
Depreciation....................................................................................... (18) (18)
Asset Basis Difference ....................................................................... (1,849) (1,819)
Other .................................................................................................. — (1)
Net Deferred Tax Asset...................................................................... $ 58,070 $ 36,476
Less Domestic Valuation Allowance ..................................................... (29,698) (19,548)
Deferred Tax Asset ............................................................................ $ 28,372 $ 16,928
Net deferred tax assets in the foregoing table include the deferred consequences of the future reversal of Peruvian deferred
tax assets and liabilities on the impact of the Peruvian employee profit share plan tax of $4.3 million in 2010 and $3.3 million in 2009.
As of December 31, 2010 and 2009, we had a valuation allowance for the full amount of the domestic deferred tax asset resulting from
the income tax benefit generated from net losses, as we believe, based on the weight of available evidence, that it is more likely than
not that the deferred tax asset will not be realized prior to the expiration of net operating loss carryforwards in various amounts
through 2030. Furthermore, because we have no operations within the U.S. taxing jurisdiction, it is likely that a sufficient generation