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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company has elected to be taxed as a REIT under the applicable provisions of the Code for every year beginning with the year ended December 31, 1985. The Company has also elected for certain of its subsidiaries to be treated as TRSs (the “TRS entities”) which are subject to federal and state income taxes. All entities other than the TRS entities are collectively referred to as the “REIT” within this Note 16. Certain REIT entities are also subject to state, local and foreign income taxes. Distributions with respect to our common stock can be characterized for federal income tax purposes as ordinary dividends, capital gains, nondividend distributions or a combination thereof. The following table shows the characterization of our annual common stock distributions per share:
| Year Ended December 31, |
| 2018 |  | 2017 |  | 2016 |
Ordinary dividends(1) | $ | 0.9578 |  |  | $ | 1.4800 |  |  | $ | 1.5561 |  |
Capital gains | 0.5222 |  |  | — |  |  | — |  |
Nondividend distributions | — |  |  | — |  |  | 6.7089 |  |
| $ | 1.4800 |  |  | $ | 1.4800 |  |  | $ | 8.2650 |  | (2)
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(1) | The 2018 amount includes $0.0164 of qualified dividend income for purposes of Code Section 1(h)(11), and $0.9414 of qualified business income for purposes of Code Section 199A.
(2) | Consists of $2.095 per common share of quarterly cash dividends and $6.17 per common share of stock dividends related to the Spin-Off (see Note 5).
HCP common stockholders on October 24, 2016, the record date for the Spin-Off (the “Record Date”), received upon the Spin-Off on October 31, 2016, one share of QCP common stock for every five shares of HCP common stock they held (the “Distributed Shares”) and cash in lieu of fractional shares of QCP. For U.S. federal income tax purposes, HCP reported the fair market value of the QCP common stock distributed per each share of HCP common stock outstanding on the Record Date as $6.17, or $30.85 for each share of QCP common stock. The TRS entities subject to tax reported losses before income taxes from continuing operations of $59 million, $58 million and $9 million for the years ended December 31, 2018, 2017 and 2016, respectively. The REIT’s losses from continuing operations before income taxes from the U.K. were $11 million, $4 million and $4 million for the years ended December 31, 2018, 2017 and 2016, respectively. The total income tax expense (benefit) from continuing operations consists of the following components (in thousands):
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
Current |  |  |  |  |
Federal | $ | (568 | ) |  | $ | 949 |  |  | $ | 8,525 |
State | 4,003 |  |  | 1,504 |  |  | 8,307 |
Foreign | 84 |  |  | 1,737 |  |  | 1,332 |
Total current | $ | 3,519 |  |  | $ | 4,190 |  |  | $ | 18,164 |
Deferred |  |  |  |  |
Federal | $ | (11,905 | ) |  | $ | 2,730 |  |  | $ | (10,241 | )
State | (4,589 | ) |  | (5,889 | ) |  | (1,401 | )
Foreign | (4,879 | ) |  | (2,364 | ) |  | (2,049 | )
Total deferred | $ | (21,373 | ) |  | $ | (5,523 | ) |  | $ | (13,691 | )
Total income tax expense (benefit) | $ | (17,854 | ) |  | $ | (1,333 | ) |  | $ | 4,473 |
On December 22, 2017, the Tax Cuts and Jobs Act was signed into law. As a result of the reduced U.S. federal corporate tax rate, the Company recorded a tax expense of $17 million, due to a remeasurement of deferred tax assets and liabilities, which is included in total deferred tax expense (benefit) in the table above. The Company’s income tax expense from discontinued operations was $48 million for the year ended December 31, 2016 (see Note 5). There was no income tax expense from discontinued operations for the years ended December 31, 2018 and 2017. The following table reconciles income tax expense (benefit) from continuing operations at statutory rates to actual income tax expense recorded (in thousands):
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
Tax benefit at U.S. federal statutory income tax rate on income or loss subject to tax | $ | (17,857 | ) |  | $ | (21,085 | ) |  | $ | (4,581 | )
State income tax expense, net of federal tax | (1,313 | ) |  | (1,222 | ) |  | 6,081 |
Gross receipts and margin taxes | 1,580 |  |  | 1,716 |  |  | 1,847 |
Foreign rate differential | 301 |  |  | 632 |  |  | 647 |
Effect of permanent differences | (34 | ) |  | 6 |  |  | (280 | )
Return to provision adjustments | (278 | ) |  | 1,597 |  |  | 287 |
Remeasurement of deferred tax assets and liabilities | — |  |  | 17,080 |  |  | — |
Increase (decrease) in valuation allowance | (253 | ) |  | (57 | ) |  | 472 |
Total income tax expense (benefit) | $ | (17,854 | ) |  | $ | (1,333 | ) |  | $ | 4,473 |
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table summarizes the significant components of the Company’s deferred tax assets and liabilities from continuing operations (in thousands):
| December 31,
| 2018 |  | 2017 |  | 2016
Property, primarily differences in depreciation and amortization, the basis of land, and the treatment of interest and certain costs | $ | 31,034 |  |  | $ | 31,691 |  |  | $ | 28,940 |
Net operating loss carryforward | 20,559 |  |  | 10,720 |  |  | 8,784 |
Expense accruals and other | 2,424 |  |  | 229 |  |  | (847 | )
Valuation allowance | (295 | ) |  | (548 | ) |  | (606 | )
Net deferred tax assets | $ | 53,722 |  |  | $ | 42,092 |  |  | $ | 36,271 |
Deferred tax assets and liabilities are included in other assets, net and accounts payable and accrued liabilities, respectively. At December 31, 2018 the Company had a net operating loss (“NOL”) carryforward of $80 million related to the TRS entities. These amounts can be used to offset future taxable income, if any. If unused, $44 million will begin to expire in 2033. The remainder, totaling $36 million, may be carried forward indefinitely. The Company records a valuation allowance against deferred tax assets in certain jurisdictions when it cannot sustain a conclusion that it is more likely than not that it can realize the deferred tax assets during the periods in which these temporary differences become deductible. The deferred tax asset valuation allowance is adequate to reduce the total deferred tax assets to an amount that the Company estimates will “more-likely-than-not” be realized. The Company files numerous U.S. federal, state and local income and franchise tax returns. With a few exceptions, the Company is no longer subject to U.S. federal, state, or local tax examinations by taxing authorities for years prior to 2015. For the years ended December 31, 2018, 2017, and 2016 the tax basis of the Company’s net assets was less than the reported amounts by $1.4 billion, $1.7 billion, and $2.0 billion, respectively. The difference between the reported amounts and the tax basis was primarily related to the Slough Estates USA, Inc. (“SEUSA”) acquisition, which occurred in 2007. SEUSA was a corporation subject to federal and state income taxes. As a result of this acquisition, the Company succeeded to the tax attributes of SEUSA, including the tax basis in the acquired company’s assets and liabilities.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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