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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Commencing January 1, 2014, the Company began operating as a REIT for U.S. income tax purposes. Since operating as a REIT, the Company filed, and intends to continue to file, as a REIT, and its TRSs filed, and intend to continue to file, as C corporations. The Company also files tax returns in various states and countries. The Company’s state tax returns reflect different combinations of the Company’s subsidiaries and are dependent on the connection each subsidiary has with a particular state. The following information pertains to the Company’s income taxes on a consolidated basis.
Income tax expense consists of the following:
CurrentDeferredTotal
Year ended December 31, 2024
U.S. federal$5,942 $945 $6,887 
State and local2,277 366 2,643 
Foreign348 (5,347)(4,999)
$8,567 $(4,036)$4,531 
Year ended December 31, 2023
U.S. federal$6,223 $1,280 $7,503 
State and local2,035 (26)2,009 
Foreign(860)1,130 270 
 $7,398 $2,384 $9,782 
Year ended December 31, 2022
U.S. federal$5,663 $2,073 $7,736 
State and local3,376 (136)3,240 
Foreign5,201 1,275 6,476 
 $14,240 $3,212 $17,452 
As of December 31, 2024, the Company had income taxes receivable of $2,104 which was recorded within other current assets on the Consolidated Balance Sheets. As of December 31, 2024 and 2023, the Company had income taxes payable of $199 and $36, respectively, which was recorded within accrued expenses on the Consolidated Balance Sheets.
The U.S. and foreign components of earnings before income taxes are as follows:
 202420232022
U.S.$368,924 $509,040 $446,395 
Foreign(1,454)(2,422)9,704 
Total$367,470 $506,618 $456,099 
A reconciliation of significant differences between the reported amount of income tax expense and the expected amount of income tax expense that would result from applying the U.S. federal statutory income tax rate of 21 percent to income before taxes for the 2024, 2023 and 2022 tax years is as follows:
202420232022
Income tax expense at U.S. federal statutory rate$77,166 $106,390 $95,781 
Tax adjustment related to REIT(a)
(76,410)(101,486)(86,793)
State and local income taxes, net of federal income tax benefit2,522 2,732 2,850 
Book expenses not deductible for tax purposes2,401 2,574 3,042 
Stock-based compensation4,814 513 (3,336)
Valuation allowance(b)
548 875 (14,984)
Undistributed earnings of foreign subsidiaries(c)
(55)(95)(84)
Jurisdictional tax rate change(5,417)— — 
Other differences, net(d)
(1,038)(1,721)20,976 
Income tax expense$4,531 $9,782 $17,452 
(a)Includes dividend paid deduction of $121,466, $107,137 and $106,129 for the tax years ended December 31, 2024, 2023 and 2022, respectively.
(b)For the years ended December 31, 2024, 2023 and 2022, a non-cash valuation allowance of $548, $875 and ($14,984), respectively, was recorded to income tax expense (benefit) due to our limited ability to utilize Puerto Rico and Canada deferred tax assets in future years.
(c)    Management does not assert that the undistributed earnings of our Canadian subsidiaries will be permanently reinvested. For the years ended December 31, 2024, 2023 and 2022, we recognized a deferred tax benefit of $55, $95 and $84, respectively, for future foreign withholding taxes related to undistributed earnings.
(d)    Under Section 1031.01(b)(10) of the 2011 Puerto Rico Code, net operating losses and the tax basis of any other assets shall be reduced for forgiveness of debt to the extent by which the taxpayer is insolvent. As a result, a non-cash expense of $15,201 was recorded to income tax expense for the reduction of Puerto Rico deferred tax assets for the year ended December 31, 2022. The Puerto Rico income tax withholding rate applicable on the accrued interest of the debt is 29%. As a result, for the year ended December 31, 2022, a cash expense of $5,068 was recorded to income tax expense.
The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:
20242023
Deferred tax assets:
Allowance for doubtful accounts$222 $211 
Net operating loss carry forwards3,637 5,261 
Tax credit carry forwards514 1,202 
Charitable contributions carry forward— 2 
Intangibles785 — 
Gross deferred tax assets5,158 6,676 
Less: valuation allowance(3,402)(5,333)
Net deferred tax assets1,756 1,343 
Deferred tax liabilities:
Intangibles— (4,926)
Accrued liabilities not deducted for tax purposes(2,214)(2,133)
Investment in partnerships(3,940)(2,611)
Property, plant and equipment(2,900)(2,956)
Undistributed earnings of foreign subsidiaries(708)(764)
Gross deferred tax liabilities(9,762)(13,390)
Net deferred tax liabilities$(8,006)$(12,047)
As of December 31, 2024, we have approximately $8,627 of U.S. net operating loss carry forwards to offset future taxable income all of which is subject to Internal Revenue Code §382 limitation but will be available to be fully utilized by no later than 2027. These carry forwards expire between 2032 through 2037.
As of December 31, 2024, we have approximately $1,427,833 of state net operating loss carry forwards before valuation allowances. These state net operating losses are available to reduce future taxable income and expire at various times and amounts. In addition, we have $47 of various credits available to offset future state income tax.
As of December 31, 2024, we had approximately $11,867 of Canadian net operating loss carry forwards before valuation allowances. These Canadian net operating losses are available to offset future taxable income. These carry forwards expire between 2026 and 2044.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those jurisdictions during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income, and tax-planning strategies in making this assessment. In order to fully realize the deferred tax assets, the Company will need to generate future taxable income before the expiration of the carry
forwards governed by the tax code. Based on the current level of pretax earnings, the Company will not generate the minimum amount of future taxable income to support the realization of the deferred tax assets. As a result, management has determined that a valuation allowance related to Canada net operating loss carry forwards and other deferred tax assets is necessary. The valuation allowance for Canada deferred tax assets as of December 31, 2024 and 2023 was $3,402 and $1,235, respectively. For this same reason, there was also a valuation allowance for Puerto Rico deferred tax assets as of December 31, 2023 of $4,098. Our Puerto Rico subsidiaries were dissolved during the year ended December 31, 2024. The net change in the total valuation allowance for the years ended December 31, 2024 and 2023 was a (decrease) increase of $(1,931) and $898, respectively. The amount of the deferred tax asset considered realizable, however, could be adjusted in the near term if estimates of future taxable income during the carry forward period increase.
As of December 31, 2024, the Company has accumulated undistributed earnings generated by our foreign subsidiaries of approximately $14,162. Management does not designate these earnings as permanently reinvested and has recognized a deferred tax liability of approximately $708 related to foreign withholding taxes on these earnings. We have recognized a current year tax benefit of $55 related to 2024 earnings.
Under ASC 740, Income Taxes, we provide for uncertain tax positions, and the related interest, and adjust recognized tax benefits and accrued interest accordingly. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance as of December 31, 2021$5,125 
Additions for tax positions related to current year718 
Additions for tax positions related to prior years1,142 
Lapse of statute of limitations(1,441)
Balance as of December 31, 20225,544 
Additions for tax positions related to prior years703 
Lapse of statute of limitations(1,815)
Balance as of December 31, 2023$4,432 
Additions for tax positions related to current year71 
Additions for tax positions related to prior years317 
Reductions for tax positions related to prior years(1,396)
Lapse of statute of limitations(798)
Balance as of December 31, 2024$2,626 
As of December 31, 2024, 2023, and 2022, there are $2,626, $4,432, and $5,544 of unrecognized tax benefits that, if recognized would impact our effective tax rate. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the year ended December 31, 2024, we recognized a benefit to interest and penalties of $71. During the years ended December 31, 2023, and 2022, we recognized $76 and $212 of expense in interest and penalties, respectively. The Company had $1,325 and $1,396 of interest and penalties accrued at December 31, 2024 and 2023, respectively.
Within the next twelve months, we expect to decrease our unrecognized tax benefits by approximately $1,560 as a result of the expiration of statute of limitations.
We are subject to income taxes in the U.S. and nearly all states. In addition, the Company is subject to income taxes in Canada and the Commonwealth of Puerto Rico. We are no longer subject to U.S federal income tax examinations by tax authorities for years prior to 2021, or for any U.S. state income tax audit prior to 2021. With respect to Canada and Puerto Rico, we are no longer subject to income tax audits for years before 2021 and 2020, respectively.
As of January 1, 2024, we and our subsidiaries are subject to the OECD Pillar Two Rules. The Pillar Two Rules can potentially lead to additional taxes when the effective tax rate (as defined by the Pillar Two Rules) in a jurisdiction is below 15%. While it is uncertain whether the U.S. will enact Pillar Two legislation, Canada where the Company operates has enacted
Pillar Two legislation. The Pillar Two Rules, however, do not apply to “Excluded Entities” considered “Real Estate Investment Vehicles” and certain subsidiaries of Excluded Entities. The majority of our entities qualify as excluded entities.
For those entities not considered Excluded Entities, Pillar Two did not have a material impact on the Company’s effective tax rate or the Company’s Consolidated Statements of Operations and Comprehensive Loss.