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Note 25 - Income Taxes | 12 Months Ended
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Dec. 31, 2022
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 25. 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, and is required to annually distribute at least 90% of its net taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. In addition, the Company will be subject to federal income tax at regular corporate rates to the extent that it distributes less than 100% of its net taxable income, including any net capital gains. 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 dividends to its stockholders equal at least the amount of its REIT taxable income. If the Company were to fail 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 would 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 TRSs 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, 2022, 2021 and 2020 (in thousands):
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | (Estimated) |  |  | (Actual) |  |  | (Actual) |
GAAP net income attributable to the Company |  | $ | 125,976 |  |  | $ | 844,059 |  |  | $ | 1,000,833 |
GAAP net (income)/loss attributable to TRSs |  |  | (6,251 | ) |  |  | (23,365 | ) |  |  | (956 | )
GAAP net income from REIT operations (1) |  |  | 119,725 |  |  |  | 820,694 |  |  |  | 999,877 |
Federal income taxes |  |  | 47,302 |  |  |  | - |  |  |  | - |
Net book depreciation in excess of tax depreciation |  |  | 130,678 |  |  |  | 77,951 |  |  |  | (55,072 | )
Deferred/prepaid/above-market and below-market rents, net |  |  | (38,810 | ) |  |  | (31,666 | ) |  |  | (16,632 | )
Fair market value debt amortization |  |  | (38,303 | ) |  |  | (17,961 | ) |  |  | (3,847 | )
Book/tax differences from executive compensation |  |  | 23,248 |  |  |  | 19,882 |  |  |  | 10,388 |
Book/tax differences from equity awards |  |  | (7,846 | ) |  |  | (3,714 | ) |  |  | 5,640 |
Book/tax differences from defined benefit plan |  |  | - |  |  |  | (2,948 | ) |  |  | - |
Book/tax differences from investments in and advances to real estate joint ventures |  |  | 18,020 |  |  |  | 16,030 |  |  |  | 40,176 |
Book/tax differences from sale of properties |  |  | 217,797 |  |  |  | (50,955 | ) |  |  | (10,547 | )
Book/tax differences from accounts receivable |  |  | (8,566 | ) |  |  | (17,707 | ) |  |  | 44,193 |
Book adjustment to property carrying values and marketable equity securities |  |  | 335,233 |  |  |  | (503,847 | ) |  |  | (589,698 | )
Taxable currency exchange gain/(loss), net |  |  | 198 |  |  |  | 1,945 |  |  |  | (29 | )
Tangible property regulation deduction |  |  | (61,492 | ) |  |  | - |  |  |  | (48,194 | )
GAAP change in ownership of joint venture interests |  |  | 45,767 |  |  |  | (5,607 | ) |  |  | - |
Dividends from TRSs |  |  | 145 |  |  |  | 23,314 |  |  |  | 2 |
Severance accrual |  |  | (1,933 | ) |  |  | (5,608 | ) |  |  | 5,874 |
Other book/tax differences, net (2) |  |  | (2,650 | ) |  |  | (20,299 | ) |  |  | (5069 | )
Adjusted REIT taxable income |  | $ | 778,513 |  |  | $ | 299,504 |  |  | $ | 377,062 |
Certain amounts in the prior periods have been reclassified to conform to the current year presentation in the table above.
(1) | All adjustments to "GAAP net income from REIT operations" are net of amounts attributable to noncontrolling interests and TRSs.
(2) | Includes Merger related costs of $20.7 million for the year ended December 31, 2021.
Characterization of Distributions The following characterizes distributions paid for tax purposes for the years ended December 31, 2022, 2021 and 2020, (amounts in thousands):
|  | 2022 |  |  | 2021 |  |  | 2020 |
Preferred L Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 9,657 |  |  |  | 84 | % |  | $ | 11,185 |  |  |  | 97 | % |  | $ | 4,382 |  |  |  | 38 | %
Capital gain |  |  | 1,839 |  |  |  | 16 | % |  |  | 346 |  |  |  | 3 | % |  |  | 7,149 |  |  |  | 62 | %
|  | $ | 11,496 |  |  |  | 100 | % |  | $ | 11,531 |  |  |  | 100 | % |  | $ | 11,531 |  |  |  | 100 | %
Preferred M Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 11,615 |  |  |  | 84 | % |  | $ | 13,469 |  |  |  | 97 | % |  | $ | 5,277 |  |  |  | 38 | %
Capital gain |  |  | 2,212 |  |  |  | 16 | % |  |  | 417 |  |  |  | 3 | % |  |  | 8,609 |  |  |  | 62 | %
|  | $ | 13,827 |  |  |  | 100 | % |  | $ | 13,886 |  |  |  | 100 | % |  | $ | 13,886 |  |  |  | 100 | %
Common Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 418,725 |  |  |  | 81 | % |  | $ | 273,272 |  |  |  | 77 | % |  | $ | 133,849 |  |  |  | 38 | %
Capital gain |  |  | 82,711 |  |  |  | 16 | % |  |  | 10,647 |  |  |  | 3 | % |  |  | 214,863 |  |  |  | 61 | %
Return of capital |  |  | 15,508 |  |  |  | 3 | % |  |  | 70,980 |  |  |  | 20 | % |  |  | 3,522 |  |  |  | 1 | %
|  | $ | 516,944 |  |  |  | 100 | % |  | $ | 354,899 |  |  |  | 100 | % |  | $ | 352,234 |  |  |  | 100 | %
Total dividends distributed for tax purposes |  | $ | 542,267 |  |  |  |  |  |  | $ | 380,316 |  |  |  |  |  |  | $ | 377,651 |  |  |  |  |
For the year ended December 31, 2022, the Company elected to retain the proceeds from the sale of ACI stock for general corporate purposes in lieu of distributing to its shareholders. This undistributed long-term capital gain is allocated to, and reportable by, each shareholder, and each shareholder is also entitled to claim a federal income tax credit for its allocable share of the federal income tax paid by the Company for 2022. The allocable share of the long-term capital gain and the federal tax credit will be reported to direct holders of Kimco common shares, on Form 2439, and to others in year-end reporting documents issued by brokerage firms if Kimco shares are held in a brokerage account. For the years ended December 31, 2021 and 2020 cash dividends paid for tax purposes were equivalent to, or in excess of, taxable income. Taxable REIT Subsidiaries and Taxable Entities The Company is subject to federal, state and local income taxes on income reported through its TRS activities, which include wholly owned subsidiaries of the Company. The Company’s TRSs include Kimco Realty Services II, Inc. (“KRS”), FNC Realty Corporation, Kimco Insurance Company (collectively “KRS Consolidated”) and the consolidated entity, Blue Ridge Real Estate Company/Big Boulder Corporation. In connection with the Merger, the Company acquired Weingarten/Investments Inc. (“WII”), a TRS of Weingarten. The Company is subject to local non-U.S. taxes on certain investments located outside the U.S. In general, under local country law applicable to the entity ownership structures the Company has in place and applicable tax treaties, the repatriation of cash to the Company from its subsidiaries and joint ventures in Canada are generally subject to withholding tax, but entities in Puerto Rico and Mexico generally are not subject to withholding tax. The Company is subject to and includes in its tax provision non-U.S. income taxes on certain investments located in jurisdictions outside the U.S. These investments are primarily held by the Company at the REIT level and not in the Company’s TRSs. Accordingly, the Company does not expect a U.S. income tax impact associated with the repatriation of undistributed earnings from the Company’s foreign subsidiaries. Income taxes are accounted for 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 (provision)/benefit for income taxes relating to the Company for the years ended December 31, 2022, 2021 and 2020, are summarized as follows (in thousands):
|  | 2022 |  |  | 2021 |  |  | 2020 |
TRSs and taxable entities |  | $ | 533 |  |  | $ | (3,380 | ) |  | $ | 522 |
REIT (1) |  |  | (57,187 | ) |  |  | - |  |  |  | (1,500 | )
Total tax provision |  | $ | (56,654 | ) |  | $ | (3,380 | ) |  | $ | (978 | )
| (1) | During 2022, the Company sold shares of ACI and recognized a long-term capital gain for tax purposes of $251.5 million. The Company elected to retain the proceeds from this stock sale for general corporate purposes and pay corporate income tax on the taxable gain. The Company accrued and paid federal taxes of $47.3 million and estimated state and local taxes of $9.9 million on this undistributed long term capital gain. This undistributed long-term capital gain is allocated to, and reportable by, each shareholder, and each shareholder is also entitled to claim a federal income tax credit for its allocable share of the federal income tax paid by the Company for 2022. The allocable share of the long-term capital gain and the federal tax credit will be reported to direct holders of Kimco common stock, on Form 2439, and to others in year-end reporting documents issued by brokerage firms if the Company’s common stock is held in a brokerage account.
Deferred Tax Assets, Liabilities and Valuation Allowances The Company’s deferred tax assets and liabilities at December 31, 2022 and 2021, were as follows (in thousands):
|  | 2022 |  |  | 2021 |
Deferred tax assets: |  |  |  |  |  |  |  |
Tax/GAAP basis differences |  | $ | 4,165 |  |  | $ | 3,286 |
Net operating losses (1) |  |  | 1,836 |  |  |  | 4,580 |
Tax credit carryforwards (2) |  |  | - |  |  |  | 2,340 |
Valuation allowance |  |  | - |  |  |  | (4,067 | )
Total deferred tax assets |  |  | 6,001 |  |  |  | 6,139 |
Deferred tax liabilities |  |  | (6,551 | ) |  |  | (8,058 | )
Net deferred tax liabilities |  | $ | (550 | ) |  | $ | (1,919 | )
| (1) | Net operating losses do not expire.
| (2) | Expiration dates ranging from 2027 to 2035.
The major differences between the GAAP basis of accounting and the basis of accounting used for federal and state income tax reporting consist of impairment charges recorded for GAAP purposes, but not recognized for tax purposes, depreciation and amortization, rental revenue recognized on the straight-line method for GAAP, reserves for doubtful accounts, above-market and below-market lease amortization, differences in GAAP and tax basis of assets sold, and the period in which certain gains were recognized for tax purposes, but not yet recognized under GAAP. Deferred tax assets and deferred tax liabilities are included in the captions Other assets and Other liabilities on the Company’s Consolidated Balance Sheets at December 31, 2022 and 2021. Under GAAP a reduction of the carrying amounts of deferred tax assets by a valuation allowance is required, if, based on the evidence available, it is more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. Effective August 1, 2016, the Company merged Kimco Realty Services, Inc. (“KRSI”), a TRS holding REIT qualifying real estate, into a wholly owned LLC (the “TRS Merger”) and KRSI was dissolved. As a result of the TRS Merger, the Company determined that the realization of its then net deferred tax assets was not deemed more likely than not and as such, the Company recorded a full valuation allowance against these net deferred tax assets that existed at the time of the Merger. During the year ended December 31, 2022, the Company was able to utilize the deferred tax assets to reduce the tax liability on the undistributed long term capital gain. 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 concluded audits by the Canadian Revenue Agency, which resulted in no adjustments or assessments. The Company had accrued $1.4 million of non-current uncertain tax positions and related interest under the provisions of the authoritative guidance that addresses accounting for income taxes at December 31, 2021, which was included in Other liabilities on the Company’s Consolidated Balance Sheets. Due to the expiration of the statute of limitations with respect to these uncertain tax positions, the $1.4 million accrual was reversed in the year ended December 31, 2022. The Company does not believe that the total amount of unrecognized tax benefits as of December 31, 2022, will significantly increase or decrease within the next 12 months.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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