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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Taxes [Abstract] |
INCOME TAXES | INCOME TAXES For income tax purposes, dividends paid to holders of common stock primarily consist of ordinary income, return of capital, capital gains, qualified dividends and un-recaptured Section 1250 gains, or a combination thereof. For the years ended December 31, 2016, 2015 and 2014, dividends per share held for the entire year were estimated to be taxable as follows:
| 2016 |  | 2015 |  | 2014
| Amount | Percentage |  | Amount | Percentage |  | Amount | Percentage
Ordinary income | $ | 3.28 |  | 100 | % |  | $ | 3.07 |  | 99.7 | % |  | $ | 2.76 |  | 94.41 | %
Return of capital | — |  | — | % |  | — |  | — | % |  | 0.16 |  | 5.59 | %
Un-recaptured Section 1250 gain | — |  | — | % |  | 0.01 |  | 0.3 | % |  | — |  | — | %
| $ | 3.28 |  | 100.00 | % |  | $ | 3.08 |  | 100.00 | % |  | $ | 2.92 |  | 100.00 | %
We designated the per share amounts above as capital gain dividends in accordance with the requirements of the Code. The difference between net income available to common shareholders for financial reporting purposes and taxable income before dividend deductions relates primarily to temporary differences such as depreciation and amortization, and deferral of gains on sold properties utilizing like kind exchanges under Internal Revenue Code, or IRC, section 1031. Merger As discussed in Note 2 (Business Combinations), on December 1, 2016, we completed the Merger pursuant to the Merger Agreement, Post Properties merged with and into MAA completing the Parent Merger, and Post LP merged with and into MAALP completing the Partnership Merger. We believe that the Partnership Merger constituted a tax free merger under Code section 708. Additionally, we believe that the Parent Merger constituted a tax free merger under Code section 368(a). As a result of the tax free merger treatment, the merger transactions did not result in the recognition of a gain to any security holder of MAA, Post Properties, MAALP, or Post LP. On December 1, 2016, MAA re-identified hedging transactions for federal income tax purposes according to Reg. §1.1221-2(f) and all relevant state income tax purposes that were previously held by Post Properties. This re-identification was made because the tax identity of Post Properties changed by virtue of the merger into MAA. These hedging transactions are included in the derivative disclosures in Note 7 (Derivatives and Hedging Activities). Taxable REIT subsidiaries We acquired the operations of a taxable REIT subidiary, or TRS, Colonial Properties Services, Inc., or CPSI, through the Colonial Merger in 2013. As a result, CPSI’s tax attributes are now included in the MAA consolidated financial statements. Formerly, CPSI provided property development, construction, leasing and management services for joint venture and third-party owned properties and administrative services to MAA and engaged in for-sale development activity. CPSI also owned and operated two multifamily apartment communities during 2016, however, during 2016, CPSI distributed these communities to MAALP. The distribution resulted in a reduction of the deferred tax asset for real estate asset basis differences and the valuation allowance. CPSI currently holds undeveloped land held for sale. We acquired the operations of a TRS, Post Asset Management, Inc., or PAM, through the Post Merger in 2016. As a result, PAM’s tax attributes are now included in the MAA consolidated financial statements. PAM provides third-party to MAA services as well as to MAA owned properties. PAM also currently holds a tract of undeveloped land held for sale. We also hold certain undeveloped land through another TRS, MAA Copper Ridge, Inc. We generally reimburse our TRSs for payroll and other costs incurred in providing services to us. All inter-company transactions are eliminated in the accompanying consolidated financial statements. A TRS is an entity that is subject to Federal, state and any applicable local corporate income tax without the benefit of the dividends paid deduction applicable to REITs. Our TRSs recognized no income tax expense for the years ended December 31, 2016, 2015 or 2014. The TRSs uses the liability method of accounting for income taxes. Deferred income tax assets and liabilities result from temporary differences. Temporary differences are differences between tax bases of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future periods. The net deferred tax assets of the Company related to net deferred tax assets of CPSI and the net-loss deferred tax asset acquired by MAA from Colonial in 2013, have been fully offset by a valuation allowance. The net deferred tax assets of PAM were immaterial at December 31, 2016. We record a valuation allowance against our net deferred tax assets when we determine that based on the weight of available evidence, it is more likely than not that our net deferred tax assets will not be realized. We considered the four sources of taxable income that should be considered when determining whether a valuation allowance is required (from least to most subjective):
• | taxable income in prior carryback years, if carryback is permitted under the tax law;
• | future reversals of existing taxable temporary differences (i.e., offset gross deferred tax assets against gross deferred tax liabilities);
• | tax planning strategies; and
• | future taxable income exclusive of reversing temporary differences and carryforwards.
For the years ended December 31, 2016 and 2015, the components of MAA's deferred income tax assets and liabilities were as follows (dollars in thousands):
| December 31, 2016 |  | December 31, 2015
Deferred tax assets: |  |  |
Real estate asset basis differences | $ | 13,387 |  |  | $ | 25,627 |
Deferred revenue | — |  |  | 22 |
Deferred expenses | 12,481 |  |  | 14,106 |
Net operating loss carryforward | 32,585 |  |  | 28,493 |
Accrued liabilities | 102 |  |  | 3,951 |
| $ | 58,555 |  |  | $ | 72,199 |
Deferred tax liabilities: |  |  |
Real estate asset basis differences | $ | (311 | ) |  | $ | (145 | )
| $ | (311 | ) |  | $ | (145 | )
Net deferred tax assets, before valuation allowance | $ | 58,244 |  |  | $ | 72,054 |
Valuation allowance | (58,244 | ) |  | (72,054 | )
Net deferred tax assets, included in other assets | $ | — |  |  | $ | — |
For the years ended December 31, 2016, 2015 and 2014, the reconciliation of income tax attributable to continuing operations for the TRSs computed at the U.S. statutory rate to the income tax provision was as follows (dollars in thousands):
| 2016 |  | 2015 |  | 2014
Tax expense at U.S. statutory rates on TRS income subject to tax | $ | 3,185 |  |  | $ | 2,506 |  |  | $ | 1,802 |
Effect of permanent differences and other | — |  |  | (730 | ) |  | (1,110 | )
Decrease in valuation allowance | (3,185 | ) |  | (1,776 | ) |  | (692 | )
TRS income tax provision | $ | — |  |  | $ | — |  |  | $ | — |
At December 31, 2016 and 2015, CPSI had federal net operating loss, or NOL, carryforwards of approximately $76.6 million and $66.0 million, respectively, for income tax purposes that expire in years 2030 to 2036. Utilization of these NOL carryforwards is subject to an annual limitation due to ownership change limitations provided by Section 382 of the Code and similar state provisions. The annual limitations may result in the expiration of NOL carryforwards before utilization. CPSI generated approximately $9.4 million of taxable loss before NOL carryforwards for the period ended December 31, 2016. We had no reserve for uncertain tax positions for the years ended December 31, 2016, 2015 and 2014. If necessary, we accrue interest and penalties on unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2016, 2015, and 2014, other expenses include estimated state franchise and other taxes, including franchise taxes in North Carolina and Tennessee. The income tax expense line item shown in the Consolidated Statement of Operations represents the Texas-based margin tax for all Texas properties and federal and state taxes for PAM. As of December 31, 2016 and 2015, MAA held federal NOL carryforwards of approximately $71.5 million and $46.3 million, respectively, for income tax purposes that expire in years 2019 to 2033. MAA's NOL increased by $25.2 million through its acquisition of Post Properties’ NOL. Utilization of our NOL carryforwards is subject to an annual limitation due to ownership change limitations provided by Section 382 of the Code and similar state provisions. The annual limitations may result in the expiration of NOL carryforwards before utilization. We may use these NOLs to offset all or a portion of the taxable income generated at the REIT level. Tax years 2013 through 2016 are subject to examination by the Internal Revenue Service. No tax examination is currently in process.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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