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INCOME TAXES | 9 Months Ended
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Sep. 30, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 13—INCOME TAXES We have elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code of 1986, as amended, for every year beginning with the year ended December 31, 1999. We have also elected for certain of our subsidiaries to be treated as taxable REIT subsidiaries (“TRS” or “TRS entities”), which are subject to federal, state and foreign income taxes. All entities other than the TRS entities are collectively referred to as the “REIT” within this note. Certain REIT entities are subject to foreign income tax. Although the TRS entities and certain other foreign entities have paid minimal federal, state and foreign income taxes for the nine months ended September 30, 2024, their income tax liabilities may increase in future periods as we exhaust net operating loss (“NOL”) carryforwards and as our operations grow. Such increases could be significant. Our consolidated provision for income taxes for the three months ended September 30, 2024 and 2023 was an expense of $3.0 million and a benefit of $1.7 million, respectively. Our consolidated provision for income taxes for the nine months ended September 30, 2024 and 2023 was an expense of $7.8 million and a benefit of $14.2 million, respectively. The income tax expense for the three and nine months ended September 30, 2024 is primarily due to the enactment of Bill C-59 in Canada, which limits the amount of interest expense we can deduct with respect to our Canadian entities. Bill C-59 is retrospectively applied to October 1, 2023 and the cumulative effect tax of such interest limitation was recognized in the second quarter of 2024. The impact of the interest limitation was partially offset by reversal of valuation allowances recorded against the net deferred tax assets of certain of our TRS entities and losses in certain of our TRS entities. The income tax benefit for the three and nine months ended September 30, 2023 was primarily due to losses in certain of our TRS entities as well as an $8.0 million benefit from internal restructurings of our U.S. TRS entities. Each TRS is a tax paying component for purposes of classifying deferred tax assets and liabilities. Deferred tax liabilities with respect to our TRS entities totaled $36.8 million and $24.5 million as of September 30, 2024 and December 31, 2023, respectively, and related primarily to differences between the financial reporting and tax bases of fixed and intangible assets, net of loss carryforwards. Deferred tax assets with respect to our TRS entities totaled $3.5 million and $1.8 million as of September 30, 2024 and December 31, 2023, respectively, and related primarily to loss carryforwards. Generally, we are subject to audit under the statute of limitations by the Internal Revenue Service for the year ended December 31, 2020 and subsequent years and are subject to audit by state taxing authorities for the year ended December 31, 2019 and subsequent years. We are subject to audit generally under the statutes of limitation by the Canada Revenue Agency and provincial authorities with respect to the Canadian entities for the year ended December 31, 2020 and subsequent years. We are subject to audit in the United Kingdom generally for periods ended in and subsequent to 2022.

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