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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes |
8. | Income Taxes
The Company has elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code with certain of its subsidiaries treated as taxable REIT subsidiary (“TRS”) entities, which are subject to federal and state income taxes. The following table summarizes the tax status of dividends paid on our common shares:
|  | Year ended December 31, |
(in thousands) |  | 2019 |  |  | 2018 |  |  | 2017 |
Dividend per share |  | $ | 2.34 |  |  |  | 2.22 |  |  |  | 2.10 |
Ordinary income |  |  | 97 | % |  |  | 98 | % |  |  | 86 | %
Capital gain |  |  | 3 | % |  |  | — | % |  |  | 10 | %
Return of capital |  |  | — | % |  |  | — | % |  |  | 4 | %
Qualified dividend income |  |  | — | % |  |  | 2 | % |  |  | — | %
Section 199A dividend |  |  | 97 | % |  |  | 98 | % |  |  | — | %
Our consolidated expense (benefit) for income taxes for the years ended December 31, 2019, 2018, and 2017 was as follows:
|  | Year ended December 31, |
(in thousands) |  | 2019 |  |  | 2018 |  |  | 2017 |
Income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 1,576 |  |  |  | 5,667 |  |  |  | 1,168 |
Deferred |  |  | (331 | ) |  |  | (5,145 | ) |  |  | (10,815 | )
Total income tax expense (benefit) (1) |  | $ | 1,245 |  |  |  | 522 |  |  |  | (9,647 | )
| (1) | Includes $757,000, $706,000 and $90,000 of tax expense presented within Other operating expenses during the years ended December 31, 2019, 2018, and 2017, respectively. Additionally, $488,000 and ($184,000) of tax expense (benefit) is presented within Gain on sale of real estate (or Provision for impairment), net of tax, during the years ended December 31, 2019 and 2018, respectively. |
The TRS entities are subject to federal and state income taxes and file separate tax returns. Income tax expense (benefit) differed from the amounts computed by applying the U.S. Federal income tax rate to pretax income of the TRS entities, as follows:
|  | Year ended December 31, |
(in thousands) |  | 2019 |  |  | 2018 |  |  | 2017 |
Computed expected tax expense (benefit) |  | $ | 1,587 |  |  |  | (584 | ) |  |  | 1,190 |
State income tax, net of federal benefit |  |  | 650 |  |  |  | 636 |  |  |  | 108 |
Valuation allowance |  |  | (91 | ) |  |  | (392 | ) |  |  | (1,512 | )
Tax rate change |  |  | — |  |  |  | — |  |  |  | (9,737 | )
Permanent items |  |  | (819 | ) |  |  | 1,067 |  |  |  | — |
All other items |  |  | (82 | ) |  |  | (205 | ) |  |  | 304 |
Total income tax expense (benefit) (1) |  |  | 1,245 |  |  |  | 522 |  |  |  | (9,647 | )
Income tax expense (benefit) attributable to operations (1) |  | $ | 1,245 |  |  |  | 522 |  |  |  | (9,647 | )
| (1) | Includes $757,000, $706,000, and $90,000 of tax expense presented within Other operating expenses during the years ended December 31, 2019, 2018, and 2017, respectively. Additionally, $488,000 and ($184,000) of tax expense (benefit) is presented within Gain on sale of real estate (or Provision for impairment), net of tax, during the years ended December 31, 2019 and 2018, respectively. |
The tax effects of temporary differences (included in Accounts payable and other liabilities in the accompanying Consolidated Balance Sheets) are summarized as follows:
|  | December 31, |
(in thousands) |  | 2019 |  |  | 2018 |
Deferred tax assets |  |  |  |  |  |  |  |
Provision for impairment |  | $ | — |  |  |  | 3,785 |
Deferred interest expense |  |  | 1,341 |  |  |  | 2,617 |
Capitalized costs under Section 263A |  |  | — |  |  |  | 713 |
Net operating loss carryforward |  |  | 106 |  |  |  | 166 |
Other |  |  | 88 |  |  |  | 2,123 |
Deferred tax assets |  |  | 1,535 |  |  |  | 9,404 |
Valuation allowance |  |  | (680 | ) |  |  | (7,907 | )
Deferred tax assets, net |  | $ | 855 |  |  |  | 1,497 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Straight line rent |  | $ | (100 | ) |  |  | (565 | )
Fixed assets |  |  | (14,404 | ) |  |  | (14,829 | )
Deferred tax liabilities |  |  | (14,504 | ) |  |  | (15,394 | )
Net deferred tax liabilities |  | $ | (13,649 | ) |  |  | (13,897 | )
The net deferred tax liability decreased during 2019 primarily due to the depreciation of property at TRS entities. Also, during 2019, the Company converted one of its TRS entities to a REIT which resulted in the reversal of that entities’ deferred tax assets, liabilities, and valuation allowance. The Company believes it is more likely than not that a portion of the remaining deferred tax assets, which primarily consist of net operating losses and deferred interest expense, will not be realized unless tax planning strategies are implemented.

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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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