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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes As discussed in Note 2, the Company operates in compliance with REIT requirements for federal income tax purposes. As a REIT, the Company must distribute at least 90 percent of its taxable income (including dividends paid to it by its TRSs). In addition, the Company must also meet certain other organizational and operational requirements. It is management’s intention to adhere to these requirements and maintain the Company’s REIT status. Most states where we operate conform to the federal rules recognizing REITs. On August 1, 2019, the Company issued OP Units of the Operating Partnership to unrelated third parties. As a result, the Operating Partnership is now a regarded partnership under federal tax law, and the Operating Partnership’s accompanying consolidated financial statements include the related provision balances for federal income taxes. Certain subsidiaries have made an election with the Company to be treated as TRSs in conjunction with the Company’s REIT election; the TRS elections permit us to engage in certain business activities in which the REIT may not engage directly. A TRS is subject to federal and state income taxes on the income from these activities. A provision for taxes of the TRSs and of foreign branches of the REIT is included in our consolidated financial statements. The Company recorded an opening deferred tax liability of $180.5 million as part of its acquisition accounting related to acquisitions completed during 2021 discussed in Note 3. This deferred tax liability primarily arose from book to tax basis differences in land, buildings and equipment and intangible assets acquired offset by certain liabilities assumed in the acquisition. The unremitted earnings and basis of certain foreign subsidiaries are indefinitely reinvested, except principally in Canada and Hong Kong. The Company changed its assertion for its Canadian subsidiaries in 2018 to begin repatriating its unremitted earnings to the U.S. starting in 2018. The Company is liquidating its Hong Kong subsidiaries and is no longer asserting permanent reinvestment there. The liquidation will not result in recognition of deferred taxes. If our plans change in the future or if we elect to repatriate the unremitted earnings of our foreign subsidiaries, we would be subject to additional income taxes which could result in a higher effective tax rate. With respect to the foreign subsidiaries owned directly or indirectly by the REIT or Operating Partnership, any unremitted earnings would not be subject to additional U.S. income tax because the REIT would distribute 100% of such earnings or would receive a participation exemption. The GILTI provisions of the TCJA impose a tax on the income of certain foreign subsidiaries in excess of a specified return on tangible assets used by the foreign companies. The Company continues to account for the GILTI inclusion as a period cost and thus has not recorded any deferred tax liability associated with GILTI. There was no taxable deemed dividend estimated or recorded for the Company for 2021 and 2019. The taxable deemed dividend recorded for the Company for the 2020 tax year is $6.8 million. Also, as a result of IRS guidance issued during the third quarter of 2018, the Company now includes any GILTI as REIT qualified income. Following is a summary of the income before income taxes in the U.S. and foreign operations:
| 2021 | 2020 | 2019
| (In thousands)
U.S. | $ | (8,046) |  | $ | 5,673 |  | $ | 33,417 |
Foreign | (23,832) |  | 11,955 |  | 9,588 |
Pre-tax (loss) income | $ | (31,878) |  | $ | 17,628 |  | $ | 43,005 |
The benefit (expense) for income taxes for the years ended December 31, 2021, 2020 and 2019 is as follows:
| 2021 | 2020 | 2019
| (In thousands)
Current |  |  |
U.S. federal | $ | 38 |  | $ | 1,085 |  | $ | (20) |
State | (236) |  | (447) |  | (670) |
Foreign | (7,380) |  | (7,443) |  | (4,854) |
Total current portion | (7,578) |  | (6,805) |  | (5,544) |
Deferred |  |  |
U.S. federal | 5,884 |  | 8,588 |  | 7,701 |
State | 1,220 |  | 2,929 |  | 2,217 |
Foreign | 2,043 |  | 2,215 |  | 783 |
Total deferred portion | 9,147 |  | 13,732 |  | 10,701 |
Total income tax benefit | $ | 1,569 |  | $ | 6,927 |  | $ | 5,157 |
Income tax benefit attributable to income before income taxes differs from the amounts computed by applying the U.S. statutory federal income tax rate of 21% to income before income taxes. The reconciliation between the statutory rate and reported amount is as follows:
| 2021 | 2020 | 2019
| (In thousands)
Income tax benefit (expense) at statutory rates | $ | 6,692 |  | $ | (3,702) |  | $ | (9,031) |
Earnings from REIT - not subject to tax | (3,599) |  | 2,681 |  | 9,526 |
State income taxes, net of federal income tax benefit | (836) |  | (446) |  | (542) |
Provision to return | 421 |  | (4) |  | 2 |
Rate and permanent differences on non-U.S. earnings | 6 |  | (1,175) |  | (971) |
Change in valuation allowance | 6,198 |  | 9,506 |  | 2,761 |
Non-deductible expenses | 4,398 |  | 387 |  | 3,462 |
Change in uncertain tax positions | 86 |  | — |  | (367) |
Income withholding tax | (989) |  | (1,191) |  | (212) |
Effect of Tax Cuts and Jobs Act | — |  | — |  | — |
Change in enacted tax rate | (11,802) |  | — |  | — |
Other | 994 |  | 871 |  | 529 |
Total | $ | 1,569 |  | $ | 6,927 |  | $ | 5,157 |
The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities as of December 31, 2021 and 2020 are as follows:
| 2021 | 2020
| (In thousands)
Deferred tax assets: |
Net operating loss and credits carryforwards | $ | 35,080 |  | $ | 21,347 |
Accrued expenses | 28,511 |  | 28,707 |
Share-based compensation | 6,872 |  | 6,042 |
Lease obligations | 19,388 |  | 10,382 |
Other assets | 11,295 |  | 1,361 |
Total gross deferred tax assets | 101,146 |  | 67,839 |
Less: valuation allowance | (1,034) |  | (9,158) |
Total net deferred tax assets | 100,112 |  | 58,681 |
Deferred tax liabilities: |  |
Intangible assets and goodwill | (79,480) |  | (80,015) |
Property, buildings and equipment | (165,905) |  | (187,114) |
Lease right-of-use assets | (18,507) |  | (10,301) |
Other liabilities | (4,875) |  | (927) |
Total gross deferred tax liabilities | (268,767) |  | (278,357) |
Net deferred tax liability | $ | (168,655) |  | $ | (219,676) |
As of December 31, 2021, the U.S. TRS has gross U.S. federal net operating loss carryforwards of approximately $46.8 million, of which $15.7 million was generated prior to 2018 and will expire between 2032 and 2036. The remaining $31.1 million in losses have no expiration, but can only be used to offset up to 80% of future taxable income annually. These losses are subject to an annual limitation under IRC section 382 as a result of our IPO and a subsequent ownership change that occurred in March of 2019; however, the limitation should not impair the Company’s ability to utilize the losses. The Company has $84.6 million in REIT U.S. federal net operating loss carryforwards which were obtained through acquisitions. These losses are also subject to an annual limitation under IRC section 382; no deferred tax value has been recorded as they can only be used to reduce required distributions to shareholders, of which none has been used for this purpose. The Company has gross state net operating loss carryforwards of approximately $55.4 million from its TRSs, of which $44.9 million will expire at various times between 2023 and 2041. The remaining $10.5 million was generated after 2017 and have no expiration. The Company received $2.2 million of its remaining outstanding alternative minimum tax credit refund in 2020. Additionally, the Company has a federal research and experimentation credit of approximately $1.0 million that will expire between 2036 and 2040. The Company has gross foreign net operating loss carryforwards of approximately $43.1 million, of which $10.2 million will expire at various times between 2023 and 2033. The remaining $32.9 million can be carried forward indefinitely. Annually we consider whether it is more-likely-than-not that the deferred tax assets will be realized. In making this assessment, we consider recent operating results, the expected scheduled reversal of deferred tax liabilities, projected future taxable benefits and tax planning strategies. The valuation allowance on our net deferred taxes decreased by $8.2 million from $9.2 million in 2020 to $1.0 million in 2021. The net decrease in valuation allowance is primarily due to certain deferred tax liabilities from U.S. acquisitions during the year that are available to offset deferred tax assets of one of our U.S. TRSs that has historically been subject to a valuation allowance. The Company’s gross unrecognized tax benefits are immaterial for each of the years ended December 31, 2021, 2020 and 2019. In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. While the Company believes that it is adequately reserved for possible audit adjustments, the final resolution of these examinations cannot be determined with certainty and could result in final settlements that differ from current estimates. The Company accrues interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2021, the Company is generally no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for years before 2018. However, for U.S. income tax purposes, the 2012, 2013, and 2016 remain open, to the extent that net operating losses were generated in those years and continue to be subject to adjustments from taxing authorities in the tax year they are utilized.

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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 http://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 http://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 http://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 http://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 http://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 http://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 http://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 http://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 http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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