XML 67 R31.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Note 22 - Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2012
Income Tax Disclosure [Text Block] | 22. Income Taxes: The Company elected to qualify as a REIT in accordance with the Code commencing with its taxable year which began January 1, 1992. To qualify as a REIT, the Company must meet several organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted REIT taxable income to its stockholders. Management intends to adhere to these requirements and maintain the Company’s REIT status. As a REIT, the Company generally will not be subject to corporate federal income tax, provided that distributions to its stockholders equal at least the amount of its REIT taxable income. If the Company failed to qualify as a REIT in any taxable year, it would be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be permitted to elect REIT status for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company is subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed taxable income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state and local income taxes. The Company is also subject to local taxes on certain Non-U.S. investments. Reconciliation between GAAP Net Income and Federal Taxable Income: The following table reconciles GAAP net income to taxable income for the years ended December 31, 2012, 2011 and 2010 (in thousands):
|  | 2012 (Estimated) |  |  | 2011 (Actual) |  |  | 2010 (Actual) |
GAAP net income attributable to the Company |  | $ | 266,073 |  |  | $ | 169,051 |  |  | $ | 142,868 |
Less: GAAP net (income)/loss of taxable REIT subsidiaries |  |  | (5,249 | ) |  |  | (19,572 | ) |  |  | 13,920 |
GAAP net income from REIT operations (a) |  |  | 260,824 |  |  |  | 149,479 |  |  |  | 156,788 |
Net book depreciation in excess of tax depreciation |  |  | 32,517 |  |  |  | 30,603 |  |  |  | 13,568 |
Deferred/prepaid/above and below market rents, net |  |  | (17,643 | ) |  |  | (16,463 | ) |  |  | (19,978 | )
Book/tax differences from non-qualified stock options |  |  | 1,653 |  |  |  | 9,879 |  |  |  | 9,103 |
Book/tax differences from investments in real estate joint ventures |  |  | 16,837 |  |  |  | 52,564 |  |  |  | 69,581 |
Book/tax difference on sale of property |  |  | (69,961 | ) |  |  | 1,811 |  |  |  | (39,139 | )
Book adjustment to property carrying values and marketable equity securities |  |  | 9,956 |  |  |  | 8,721 |  |  |  | 19,065 |
Taxable currency exchange (loss)/gain, net |  |  | (1,611 | ) |  |  | 6,502 |  |  |  | 13,134 |
Book/tax differences on capitalized costs |  |  | 2,899 |  |  |  | 3,228 |  |  |  | (12,782 | )
Dividends from taxable REIT subsidiaries |  |  | 1,000 |  |  |  | 15,969 |  |  |  | - |
Other book/tax differences, net |  |  | (845 | ) |  |  | 1,016 |  |  |  | (6,064 | )
Adjusted REIT taxable income |  | $ | 235,626 |  |  | $ | 263,309 |  |  | $ | 203,276 |
Certain amounts in the prior periods have been reclassified to conform to the current year presentation, in the table above.
(a) | All adjustments to "GAAP net income from REIT operations" are net of amounts attributable to noncontrolling interest and taxable REIT subsidiaries.
Cash Dividends Paid and Dividends Paid Deductions (in thousands): For the years ended December 31, 2012, 2011 and 2010 cash dividends paid exceeded the dividends paid deduction and amounted to $382,722, $353,764, and $306,964, respectively. Characterization of Distributions: The following characterizes distributions paid for the years ended December 31, 2012, 2011 and 2010, (in thousands):
|  | 2012 |  |  |  |  |  | 2011 |  |  |  |  |  | 2010 |  |  |  |
Preferred F Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 9,116 |  |  |  | 94 | % |  | $ | 11,638 |  |  |  | 100 | % |  | $ | 11,638 |  |  |  | 100 | %
Capital gain |  |  | 582 |  |  |  | 6 | % |  |  | - |  |  |  | - | % |  |  | - |  |  |  | - | %
|  | $ | 9,698 |  |  |  | 100 | % |  | $ | 11,638 |  |  |  | 100 | % |  | $ | 11,638 |  |  |  | 100 | %
Preferred G Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 33,046 |  |  |  | 94 | % |  | $ | 35,650 |  |  |  | 100 | % |  | $ | 35,650 |  |  |  | 100 | %
Capital gain |  |  | 2,109 |  |  |  | 6 | % |  |  | - |  |  |  | - | % |  |  | - |  |  |  | - | %
|  | $ | 35,155 |  |  |  | 100 | % |  | $ | 35,650 |  |  |  | 100 | % |  | $ | 35,650 |  |  |  | 100 | %
Preferred H Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 11,351 |  |  |  | 94 | % |  | $ | 13,584 |  |  |  | 100 | % |  | $ | - |  |  |  | - | %
Capital gain |  |  | 725 |  |  |  | 6 | % |  |  | - |  |  |  | - | % |  |  | - |  |  |  | - | %
|  | $ | 12,076 |  |  |  | 100 | % |  | $ | 13,584 |  |  |  | 100 | % |  | $ | - |  |  |  | - | %
Preferred I Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 12,847 |  |  |  | 94 | % |  | $ | - |  |  |  | - | % |  | $ | - |  |  |  | - | %
Capital gain |  |  | 820 |  |  |  | 6 | % |  |  | - |  |  |  | - | % |  |  | - |  |  |  | - | %
|  | $ | 13,667 |  |  |  | 100 | % |  | $ | - |  |  |  | - | % |  | $ | - |  |  |  | - | %
Preferred J Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 2,585 |  |  |  | 94 | % |  | $ | - |  |  |  | - | % |  | $ | - |  |  |  | - | %
Capital gain |  |  | 165 |  |  |  | 6 | % |  |  | - |  |  |  | - | % |  |  | - |  |  |  | - | %
|  | $ | 2,750 |  |  |  | 100 | % |  | $ | - |  |  |  | - | % |  | $ | - |  |  |  | - | %
Common Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 222,751 |  |  |  | 72 | % |  | $ | 208,832 |  |  |  | 71 | % |  | $ | 181,773 |  |  |  | 70 | %
Capital Gain |  |  | 15,469 |  |  |  | 5 | % |  |  | - |  |  |  | - | % |  |  | - |  |  |  | - | %
Return of capital |  |  | 71,156 |  |  |  | 23 | % |  |  | 84,060 |  |  |  | 29 | % |  |  | 77,903 |  |  |  | 30 | %
|  | $ | 309,376 |  |  |  | 100 | % |  | $ | 292,892 |  |  |  | 100 | % |  | $ | 259,676 |  |  |  | 100 | %
Total dividends distributed |  | $ | 382,722 |  |  |  |  |  |  | $ | 353,764 |  |  |  |  |  |  | $ | 306,964 |  |  |  |  |
Taxable REIT Subsidiaries and Taxable Entities: The Company is subject to federal, state and local income taxes on income earned from activities conducted through taxable REIT subsidiaries (“TRS”). TRS activities include Kimco Realty Services ("KRS"), a wholly-owned subsidiary of the Company and its subsidiaries, and the consolidated entities of FNC Corporation (“FNC”), and Blue Ridge Real Estate Company/Big Boulder Corporation. The Company is also subject to taxes on its activities in Canada, Mexico, Brazil, Chile, and Peru. Dividends paid to the Company from its subsidiaries and joint ventures in Canada, Mexico and Brazil are generally not subject to withholding taxes under the applicable tax treaty with the United States. Chile and Peru impose a 10% and 4.1% withholding tax, respectively, on dividend distributions. Brazil levies a 0.38% transaction tax on return of capital distributions. During 2012, less than $0.1 million of withholding and transaction taxes were withheld from distributions related to foreign activities. Income taxes have been provided for on the asset and liability method as required by the FASB’s Income Tax guidance. Under the asset and liability method, deferred income taxes are recognized for the temporary differences between the financial reporting basis and the tax basis of taxable assets and liabilities. The Company’s pre-tax book income/(loss) and (provision)/benefit for income taxes relating to the Company’s TRS and taxable entities which have been consolidated for accounting reporting purposes, for the years ended December 31, 2012, 2011, and 2010, are summarized as follows (in thousands):
|  | 2012 |  |  | 2011 |  |  | 2010 |
Income/(loss) before income taxes – U.S. |  | $ | 8,389 |  |  | $ | 36,077 |  |  | $ | (23,658 | )
(Provision)/benefit for income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |
Federal : |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | (503 | ) |  |  | (2,463 | ) |  |  | 1,482 |
Deferred |  |  | (535 | ) |  |  | (10,635 | ) |  |  | 7,136 |
Federal tax (provision)/benefit |  |  | (1,038 | ) |  |  | (13,098 | ) |  |  | 8,618 |
State and local: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | (1,543 | ) |  |  | (1,343 | ) |  |  | (265 | )
Deferred |  |  | (560 | ) |  |  | (2,064 | ) |  |  | 1,385 |
State tax (provision)/benefit |  |  | (2,103 | ) |  |  | (3,407 | ) |  |  | 1,120 |
Total tax (provision)/benefit – U.S. |  |  | (3,141 | ) |  |  | (16,505 | ) |  |  | 9,738 |
Net income/(loss) from U.S. taxable REIT subsidiaries |  | $ | 5,248 |  |  | $ | 19,572 |  |  | $ | (13,920 | )
Income before taxes – Non-U.S. |  | $ | 33,842 |  |  | $ | 63,154 |  |  | $ | 102,426 |
(Provision)/benefit for Non-U.S. income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 5,790 |  |  | $ | (4,484 | ) |  | $ | (13,671 | )
Deferred |  |  | 1,239 |  |  |  | 2,784 |  |  |  | 430 |
Non-U.S. tax provision |  | $ | 7,029 |  |  | $ | (1,700 | ) |  | $ | (13,241 | )
The Company’s deferred tax assets and liabilities at December 31, 2012 and 2011, were as follows (in thousands):
|  | 2012 |  |  | 2011 |
Deferred tax assets: |  |  |  |  |  |
Tax/GAAP basis differences |  | $ | 68,623 |  |  | $ | 66,177 |
Net operating losses |  |  | 43,483 |  |  |  | 47,719 |
Related party deferred loss |  |  | 6,214 |  |  |  | 7,577 |
Tax credit carryforwards |  |  | 3,815 |  |  |  | 3,537 |
Capital loss carryforwards |  |  | 647 |  |  |  | 364 |
Charitable contribution carryforward |  |  | 3 |  |  |  | - |
Non-U.S. tax/GAAP basis differences |  |  | 62,548 |  |  |  | 63,610 |
Valuation allowance – U.S. |  |  | (33,783 | ) |  |  | (33,783 | )
Valuation allowance – Non-U.S. |  |  | (38,129 | ) |  |  | (32,737 | )
Total deferred tax assets |  |  | 113,421 |  |  |  | 122,464 |
Deferred tax liabilities – U.S. |  |  | (9,933 | ) |  |  | (11,434 | )
Deferred tax liabilities – Non-U.S. |  |  | (13,263 | ) |  |  | (16,085 | )
Net deferred tax assets |  | $ | 90,225 |  |  | $ | 94,945 |
As of December 31, 2012, the Company had net deferred tax assets of $90.2 million comprised of (i) $58.7 million relating to the difference between the basis of accounting for federal and state income tax reporting and GAAP reporting for real estate assets, joint ventures, and other investments, net of $9.9 million of deferred tax liabilities, (ii) $4.0 million and $5.7 million for the tax effect of net operating loss carryovers within KRS and FNC, respectively, net of a valuation allowance within FNC of $33.8 million, (iii) $6.2 million for losses deferred for federal and state income tax purposes for transactions with related parties, (iv) $3.8 million for tax credit carryovers, (v) $0.6 million for capital loss carryovers, and (vi) $11.2 million of deferred tax assets related to its investments in Canada and Latin America, net of a valuation allowance of $38.1 million and deferred tax liabilities of $13.3 million. General business tax credit carryovers of $2.2 million within KRS expire during taxable years from 2027 through 2031, and alternative minimum tax credit carryovers of $1.6 million do not expire. The major differences between GAAP basis of accounting and the basis of accounting used for federal and state income tax reporting consist of impairment charges recorded for GAAP, but not recognized for tax purposes, depreciation and amortization, rental revenue recognized on the straight line method for GAAP, reserves for doubtful accounts, and the period in which certain gains were recognized for tax purposes, but not yet recognized under GAAP. The Company had foreign net deferred tax assets of $11.2 million, related to its operations in Canada and Latin America, which consists primarily of differences between the GAAP book basis and the basis of accounting applicable to the jurisdictions in which the Company is subject to tax. Deferred tax assets and deferred tax liabilities are included in the caption Other assets and Other liabilities on the accompanying Consolidated Balance Sheets at December 31, 2012 and 2011. Operating losses and the valuation allowance are related primarily to the Company’s consolidation of its taxable REIT subsidiaries for accounting and reporting purposes. For the year ended December 31, 2011, KRS generated $12.5 million, of net operating loss carryovers that expire 2031. For the year ended December 31, 2012, KRS produced $12.1 million of taxable income and utilized $12.1 million of its $22.1 million net operating loss carryovers. At December 31, 2012 and 2011, FNC had $101.3 million and $106.2 million, respectively, of net operating loss carryovers that expire from 2021 through 2026. The Company maintained a valuation allowance of $33.8 million within FNC to reduce the deferred tax asset of $39.5 million related to net operating loss carryovers to the amount the Company determined is more likely than not realizable. The Company analyzed projected taxable income and the expected utilization of FNC’s remaining net operating loss carryovers and determined a partial valuation allowance was appropriate. The Company’s investments in Latin America are made through individual entities which are subject to local taxes. The Company assesses each entity to determine if deferred tax assets are more likely than not realizable. This assessment primarily includes an analysis of cumulative earnings and the determination of future earnings to the extent necessary to fully realize the individual deferred tax asset. Based on this analysis the Company has determined that a full valuation allowance is required for entities which have a three-year cumulative book loss and for which future earnings are not readily determinable. In addition, the Company has determined that no valuation allowance is needed for entities that have three-years of cumulative book income and future earnings are anticipated to be sufficient to more likely than not realize their deferred tax assets. At December 31, 2012, the Company had total deferred tax assets of $43.8 million relating to its Latin American investments with an aggregate valuation allowance of $38.1 million. The Company’s deferred tax assets in Canada result principally from depreciation deducted under GAAP that exceed capital cost allowances claimed under Canadian tax rules. The deferred tax asset will naturally reverse upon disposition as tax basis will be greater than the basis of the assets under generally accepted accounting principles. As of December 31, 2012, the Company determined that no valuation allowance was needed against a $70.2 million net deferred tax asset within KRS. The Company based its determination on an analysis of both positive evidence and negative evidence using its judgment as to the relative weight of each. The Company believes, when evaluating KRS’s deferred tax assets, special consideration should be given to the unique relationship between the Company as a REIT and KRS as a taxable REIT subsidiary. This relationship exists primarily to protect the REIT’s qualification under the Code by permitting, within certain limits, the REIT to engage in certain business activities in which the REIT cannot directly participate. As such, the REIT controls which and when investments are held in, or distributed or sold from, KRS. This relationship distinguishes a REIT and taxable REIT subsidiary from an enterprise that operates as a single, consolidated corporate taxpayer. The Company will continue through this structure to operate certain business activities in KRS. The Company’s analysis of KRS’s ability to utilize its deferred tax assets includes an estimate of future projected income. To determine future projected income, the Company scheduled KRS’s pre-tax book income and taxable income over a twenty year period taking into account its continuing operations (“Core Earnings”). Core Earnings consist of estimated net operating income for properties currently in service and generating rental income. Major lease turnover is not expected in these properties as these properties were generally constructed and leased within the past five years. The Company also included known future events in its projected income forecast. In addition, the Company can employ additional strategies to realize KRS’s deferred tax assets including transferring its property management business, sale of certain built-in gain assets, and further reducing intercompany debt. The Company’s projection of KRS’s future taxable income over twenty years, utilizing the assumptions above with respect to Core Earnings, net of related expenses, generates $315.2 million after the reversal of $87.4 million of deductible temporary differences. Based on this analysis, the Company concluded it is more likely than not that KRS’s net deferred tax asset of $70.2 million will be realized and therefore, no valuation allowance is needed at December 31, 2012. If future income projections do not occur as forecasted or the Company incurs additional impairment losses in excess of the amount Core Earnings can absorb, the Company will reconsider the need for a valuation allowance. (Benefit)/provision differ from the amount computed by applying the statutory federal income tax rate to taxable income before income taxes were as follows (in thousands):
|  | 2012 |  |  | 2011 |  |  | 2010 |
Federal benefit at statutory tax rate (35%) |  | $ | 2,936 |  |  | $ | 12,627 |  |  | $ | (8,280 | )
State and local taxes, net of federal benefit |  |  | 230 |  |  |  | 1,683 |  |  |  | (728 | )
Other |  |  | (25 | ) |  |  | 2,195 |  |  |  | (730 | )
Total tax provision/(benefit) – U.S. |  | $ | 3,141 |  |  | $ | 16,505 |  |  | $ | (9,738 | )
Uncertain Tax Positions: The Company is subject to income tax in certain jurisdictions outside the U.S., principally Canada and Mexico. The statute of limitations on assessment of tax varies from three to seven years depending on the jurisdiction and tax issue. Tax returns filed in each jurisdiction are subject to examination by local tax authorities. The Company is currently under audit by the Canadian Revenue Agency, Mexican Tax Authority and the U.S. Internal Revenue Service (“IRS”). In October 2011, the IRS issued a notice of proposed adjustment, which proposes pursuant to Section 482 of the Code, to disallow a capital loss claimed by KRS on the disposition of common shares of Valad Property Ltd., an Australian publicly listed company. Because the adjustment is being made pursuant to Section 482 of the Code, the IRS may assert a 100 percent “penalty” tax pursuant to Section 857(b)(7) of the Code in lieu of disallowing the capital loss deduction. The notice of proposed adjustment indicates the IRS’ intention to impose the 100 percent penalty tax on the Company in the amount of $40.9 million and disallowing the capital loss claimed by KRS. The Company strongly disagrees with the IRS’ position on the application of Section 482 of the Code to the disposition of the shares, the imposition of the 100 percent penalty tax and the simultaneous assertion of the penalty tax and disallowance of the capital loss deduction.The Company received a Notice of Proposed Assessment and filed a written protest and requested an IRS Appeals Office conference, which has yet to be scheduled. The Company intends to vigorously defend its position in this matter and believes it will prevail. Resolutions of these audits are not expected to have a material effect on the Company’s financial statements. The Company does not believe that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months. The liability for uncertain tax benefits principally consists of estimated foreign, federal and state income tax liabilities for the years ended December 31, 2012 and 2011. The aggregate changes in the balance of unrecognized tax benefits were as follows (in thousands):
|  | 2012 |  |  | 2011 |
Balance, beginning of year |  | $ | 16,901 |  |  | $ | 14,908 |
Increases for tax positions related to current year |  |  | 3,079 |  |  |  | 1,993 |
Reductions due to lapsed statute of limitations |  |  | (3,090 | ) |  |  | - |
Balance, end of year |  | $ | 16,890 |  |  | $ | 16,901 |

X
- 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 Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: 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=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: 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=6907707&loc=d3e32537-109319 Reference 7: 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=6907707&loc=d3e32639-109319 Reference 8: 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=6907707&loc=d3e32559-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration