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Note 24 - Income Taxes | 12 Months Ended
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Dec. 31, 2023
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 24. 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. 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, 2023, 2022 and 2021 (in thousands):
|  | 2023 |  |  | 2022 |  |  | 2021 |
|  | (Estimated) |  |  | (Actual) |  |  | (Actual) |
GAAP net income attributable to the Company |  | $ | 654,273 |  |  | $ | 125,976 |  |  | $ | 844,059 |
GAAP net income attributable to TRSs |  |  | (64 | ) |  |  | (5,042 | ) |  |  | (23,365 | )
GAAP net income from REIT operations (1) |  |  | 654,209 |  |  |  | 120,934 |  |  |  | 820,694 |
Federal income taxes |  |  | 50,661 |  |  |  | 47,328 |  |  |  | - |
Net book depreciation in excess of tax depreciation |  |  | 95,468 |  |  |  | 120,446 |  |  |  | 77,951 |
Deferred/prepaid/above-market and below-market rents, net |  |  | (31,982 | ) |  |  | (38,479 | ) |  |  | (31,666 | )
Fair market value debt amortization |  |  | (21,053 | ) |  |  | (38,303 | ) |  |  | (17,961 | )
Book/tax differences from executive compensation |  |  | 31,169 |  |  |  | 23,248 |  |  |  | 19,882 |
Book/tax differences from equity awards |  |  | (7,157 | ) |  |  | (7,846 | ) |  |  | (3,714 | )
Book/tax differences from defined benefit plan |  |  | 2,948 |  |  |  | - |  |  |  | (2,948 | )
Book/tax differences from investments in and advances to real estate joint ventures |  |  | 27,163 |  |  |  | 11,736 |  |  |  | 16,030 |
Book/tax differences from sale of properties |  |  | 177,772 |  |  |  | 217,797 |  |  |  | (50,955 | )
Book/tax differences from accounts receivable |  |  | (4,284 | ) |  |  | (8,430 | ) |  |  | (17,707 | )
Book adjustment to property carrying values and marketable equity securities |  |  | (24,275 | ) |  |  | 335,199 |  |  |  | (503,847 | )
Taxable currency exchange (loss)/gain, net |  |  | (2,446 | ) |  |  | 198 |  |  |  | 1,945 |
Tangible property regulation deduction |  |  | (65,000 | ) |  |  | (61,492 | ) |  |  | - |
GAAP change in ownership of joint venture interests |  |  | (7,574 | ) |  |  | 45,767 |  |  |  | (5,607 | )
Dividends from TRSs |  |  | - |  |  |  | 243 |  |  |  | 23,314 |
Severance accrual |  |  | (573 | ) |  |  | (2,065 | ) |  |  | (5,608 | )
Other book/tax differences, net (2) |  |  | 7,803 |  |  |  | 2,115 |  |  |  | (20,299 | )
Adjusted REIT taxable income (3) |  | $ | 882,849 |  |  | $ | 768,396 |  |  | $ | 299,504 |
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 book/tax differences of $4.8 million and ($20.7) million for the years ended December 31, 2023 and 2021, respectively.
(3) | Includes a long term capital gain of $241.2 million and $251.5 million for the years ended December 31, 2023 and 2022, respectively, for which the Company elected to pay the associated corporate income taxes.
Characterization of Distributions The following characterizes distributions paid for tax purposes for the years ended December 31, 2023, 2022 and 2021, (amounts in thousands):
|  | 2023 |  |  | 2022 |  |  | 2021 |
Preferred L Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 11,432 |  |  |  | 100 | % |  | $ | 9,657 |  |  |  | 84 | % |  | $ | 11,185 |  |  |  | 97 | %
Capital gain |  |  | - |  |  |  | - |  |  |  | 1,839 |  |  |  | 16 | % |  |  | 346 |  |  |  | 3 | %
|  | $ | 11,432 |  |  |  | 100 | % |  | $ | 11,496 |  |  |  | 100 | % |  | $ | 11,531 |  |  |  | 100 | %
Preferred M Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 13,749 |  |  |  | 100 | % |  | $ | 11,615 |  |  |  | 84 | % |  | $ | 13,469 |  |  |  | 97 | %
Capital gain |  |  | - |  |  |  | - |  |  |  | 2,212 |  |  |  | 16 | % |  |  | 417 |  |  |  | 3 | %
|  | $ | 13,749 |  |  |  | 100 | % |  | $ | 13,827 |  |  |  | 100 | % |  | $ | 13,886 |  |  |  | 100 | %
Common Dividends |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary income |  | $ | 622,885 |  |  |  | 99 | % |  | $ | 418,725 |  |  |  | 81 | % |  | $ | 273,272 |  |  |  | 77 | %
Capital gain |  |  | - |  |  |  | - |  |  |  | 82,711 |  |  |  | 16 | % |  |  | 10,647 |  |  |  | 3 | %
Return of capital |  |  | 6,292 |  |  |  | 1 | % |  |  | 15,508 |  |  |  | 3 | % |  |  | 70,980 |  |  |  | 20 | %
|  | $ | 629,177 |  |  |  | 100 | % |  | $ | 516,944 |  |  |  | 100 | % |  | $ | 354,899 |  |  |  | 100 | %
Total dividends distributed for tax purposes |  | $ | 654,358 |  |  |  |  |  |  | $ | 542,267 |  |  |  |  |  |  | $ | 380,316 |  |  |  |  |
For the years ended December 31, 2023 and 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. 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 year ended December 31, 2021, 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., FNC Realty Corporation, Kimco Insurance Company, Weingarten Investments Inc. and the consolidated entity, Blue Ridge Real Estate Company/Big Boulder Corporation. 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, 2023, 2022 and 2021, are summarized as follows (in thousands):
|  | 2023 |  |  | 2022 |  |  | 2021 |
TRSs and taxable entities |  | $ | (83 | ) |  | $ | 533 |  |  | $ | (3,380 | )
REIT (1) |  |  | (60,869 | ) |  |  | (57,187 | ) |  |  | - |
Total tax provision |  | $ | (60,952 | ) |  | $ | (56,654 | ) |  | $ | (3,380 | )
| (1) | During 2023 and 2022, the Company sold shares of ACI common stock and recognized long-term capital gains for tax purposes of $241.2 million and $251.5 million, respectively. The Company elected to retain the proceeds from these stock sales for general corporate purposes and pay corporate income tax on the taxable gains. During 2023, the Company incurred federal taxes of $50.7 million and state and local taxes of $10.2 million. During 2022, the Company incurred federal taxes of $47.3 million and state and local taxes of $9.9 million. 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. 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, 2023 and 2022, were as follows (in thousands):
|  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |  |  |
Tax/GAAP basis differences |  | $ | 3,293 |  |  | $ | 4,165 |
Net operating losses (1) |  |  | 4,463 |  |  |  | 1,836 |
Valuation allowance |  |  | (3,776 | ) |  |  | - |
Total deferred tax assets |  |  | 3,980 |  |  |  | 6,001 |
Deferred tax liabilities |  |  | (5,843 | ) |  |  | (6,551 | )
Net deferred tax liabilities |  | $ | (1,863 | ) |  | $ | (550 | )
| (1) | Net operating losses do not expire.
The major differences between the GAAP basis of accounting and the basis of accounting used for federal and state income tax reporting consist of depreciation and amortization, impairment charges recorded for GAAP purposes, but not recognized for tax purposes, 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, 2023 and 2022. 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. Uncertain Tax Positions As of December 31, 2023 and 2022, the Company had no accrual for uncertain tax positions and related interest under the provisions of the authoritative guidance that addresses accounting for income taxes. The Company does not believe that the total amount of unrecognized tax benefits as of December 31, 2023, will significantly increase within the next 12 months.

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