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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income TaxesFor taxable years prior to 2017, the Company filed a consolidated federal income tax return, which included all of its wholly owned subsidiaries. On October 15, 2018, the Company filed its 2017 Form 1120-REIT with the Internal Revenue Service. The Company's taxable REIT subsidiary ("TRS") filed separately as a C corporation. The Company also files separate income tax returns in various states. The Company completed the necessary preparatory work and obtained the necessary approvals such that the Company believes it has been organized and operates in a manner that enables it to qualify, and continue to qualify, as a REIT for federal income tax purposes. As a REIT, the Company will generally be allowed a deduction for dividends that it pays, and therefore, will not be subject to United States federal corporate income tax on its taxable income that is currently distributed to shareholders. The Company may be subject to certain state gross income and franchise taxes, as well as taxes on any undistributed income and federal and state corporate taxes on any income earned by its TRS. In addition, the Company could be subject to corporate income taxes related to assets held by the REIT that are sold during the 5-year period following the date of conversion, to the extent such sold assets had a built-in gain as of January 1, 2017. The Company does not intend to dispose of any REIT assets after the REIT conversion within the 5-year period, unless various tax planning strategies, including Code §1031 like-kind exchanges or other deferred tax structures are available to mitigate the built-in gain tax liability of conversion. Distributions with respect to the Company’s common stock can be characterized for federal income tax purposes as ordinary income, capital gains, unrecaptured section 1250 gains, return of capital, or a combination thereof. Taxable distributions paid for the years ended December 31, 2020 and 2019 were classified as ordinary income. Distributions paid for the year ended December 31, 2018 included taxable ordinary income and a non-taxable return of capital. The income tax expense (benefit) on income (loss) from continuing operations for the years ended December 31, 2020, 2019 and 2018 consisted of the following (in millions):
|  | 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |  |
Federal |  | $ | (0.1) |  |  | $ | (1.6) |  |  | $ | (0.3) |
State |  | (0.3) |  |  | (0.4) |  |  | — |
Current |  | $ | (0.4) |  |  | $ | (2.0) |  |  | $ | (0.3) |
Deferred: |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | 14.0 |
State |  | — |  |  | — |  |  | 2.6 |
Deferred |  | $ | — |  |  | $ | — |  |  | $ | 16.6 |
Income tax expense (benefit) |  | $ | (0.4) |  |  | $ | (2.0) |  |  | $ | 16.3 |
Income tax expense (benefit) for the years ended December 31, 2020, 2019, and 2018 differs from amounts computed by applying the statutory federal rate to income from continuing operations before income taxes for the following reasons (in millions):
|  | 2020 |  | 2019 |  | 2018
Computed federal income tax expense |  | $ | 1.2 |  |  | $ | (8.2) |  |  | $ | (11.1) |
State income taxes |  | (1.1) |  |  | (5.1) |  |  | (15.6) |
Valuation allowance |  | 3.4 |  |  | 8.3 |  |  | 84.4 |
REIT rate differential |  | (4.7) |  |  | (7.9) |  |  | (51.5) |
Amended return |  | — |  |  | (1.1) |  |  | 0.6 |
Noncontrolling interest |  | 0.1 |  |  | 0.5 |  |  | (0.6) |
Impairment |  | — |  |  | 12.4 |  |  | 10.7 |
Other, net |  | 0.7 |  |  | (0.9) |  |  | (0.6) |
Income tax expense (benefit) |  | $ | (0.4) |  |  | $ | (2.0) |  |  | $ | 16.3 |
The change in the Company's effective tax rate for the year ended December 31, 2020 as compared to the year ended December 31, 2019 is primarily due to impairments incurred in 2019, changes in the valuation allowance on deferred tax assets during the year and overall increase in pretax book income for the year ended December 31, 2020. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2020 and 2019 were as follows (in millions):
|  | 2020 |  | 2019
Deferred tax assets: |  |  |  |
Employee benefits |  | $ | 11.5 |  |  | $ | 10.4 |
Capitalized costs |  | 5.5 |  |  | 6.2 |
Joint ventures and other investments |  | 42.6 |  |  | 49.1 |
Impairment and amortization |  | 1.6 |  |  | 0.9 |
Solar investment benefits |  | 15.7 |  |  | 16.7 |
Insurance and other reserves |  | 6.4 |  |  | 3.2 |
Disallowed interest expense |  | 9.1 |  |  | 8.4 |
Net operating losses |  | 20.5 |  |  | 17.6 |
Operating lease liability |  | 2.0 |  |  | 2.6 |
Other |  | 3.2 |  |  | 3.4 |
Total deferred tax assets |  | $ | 118.1 |  |  | $ | 118.5 |
Valuation allowance |  | (104.0) |  |  | (99.3) |
Total net deferred tax assets |  | $ | 14.1 |  |  | $ | 19.2 |
Deferred tax liabilities: |  |  |  |
Property (including tax-deferred gains on real estate transactions) |  | $ | 12.2 |  |  | $ | 16.0 |
Operating lease asset |  | 1.9 |  |  | 2.5 |
Other |  | — |  |  | 0.7 |
Total deferred tax liabilities |  | $ | 14.1 |  |  | $ | 19.2 |
Net deferred tax assets (liabilities) |  | $ | — |  |  | $ | — |
Federal tax credit carryforwards at December 31, 2020 totaled $8.7 million and will expire in 2036. State tax credit carryforwards at December 31, 2020 totaled $6.9 million and may be carried forward indefinitely under state law. As of December 31, 2020, the Company had gross federal net operating loss carryforwards of $74.9 million ($15.7 million tax-effected), of which $11.5 million ($2.4 million tax-effected) will expire in 2037, with the remaining being carried forward indefinitely under federal law. As of December 31, 2020, the Company had state net operating loss carryforwards of $94.3 million ($4.8 million tax-effected), of which $21.6 million ($1.1 million tax-effected) of Hawai‘i net operating loss carryforwards will expire in 2037, and the remaining being carried forward indefinitely. A valuation allowance must be provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized, based upon consideration of all positive and negative evidence. Sources of evidence include, among other things, a history of pretax earnings or losses, expectations of future results, tax planning opportunities and appropriate tax law. Due to the recent losses the Company has generated in its TRS, the Company believes that it is more likely than not that its U.S. and state deferred tax assets will not be realized as of December 31, 2020. Therefore, the Company recorded an increase in the valuation allowance of $4.7 million on its net U.S. and state deferred tax assets for the current period. Should the Company determine that it would be able to realize its deferred tax assets in the foreseeable future, an adjustment to the deferred tax assets may cause a material increase to income in the period such determination is made. Significant management judgment is required in determining the period in which reversal of a valuation allowance should occur. The net change to the valuation allowance recorded during the years ended December 31, 2020, 2019 and 2018 were as follows (in millions):
|  | Balance at Beginning of Year |  | Net Change |  | Balance at End of Year
2020 |  | $ | 99.3 |  |  | $ | 4.7 |  |  | $ | 104.0 |
2019 |  | $ | 91.5 |  |  | $ | 7.8 |  |  | $ | 99.3 |
2018 |  | $ | 6.9 |  |  | $ | 84.6 |  |  | $ | 91.5 |
The Company receives an income tax benefit for exercised stock options calculated as the difference between the fair market value of the stock issued at the time of exercise and the option exercise price, tax-effected. The Company also receives an income tax benefit for restricted stock units when they vest, measured as the fair market value of the stock issued at the time of vesting, tax effected. Due to the Company's valuation allowance in the respective periods, there were no net tax benefits recognized from share-based transactions for 2020, 2019 or 2018. The Company recognizes accrued interest and penalties on income taxes as a component of income tax expense. As of December 31, 2020, accrued interest and penalties were not material. The Company has not identified any material unrecognized tax positions and as such has no related interest or penalty accruals. As of December 31, 2020, tax years 2017 and later are open to audit by the tax authorities. The Company does not believe that the result of any potential audits will have a material adverse effect on its results of operations, financial condition or liquidity. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020, providing companies with various tax relief provisions and other stimulus measures. Such measures include, but are not limited to, temporary changes regarding the prior and future utilization of net operating losses, technical corrections to prior tax legislation for tax depreciation of certain qualified improvement property, acceleration of AMT credit refunds, and changes to business interest limitations. The Consolidated Appropriations Act was also signed into law on December 27, 2020 to provide further relief measures and renew various expiring tax provisions. Additionally, the IRS issued final regulations and proposed regulations on calculating the limitation on business interest expense, the allowance for the first-year depreciation deduction under Code Section 168(k), as amended by the Tax Cuts and Jobs Act, for qualified property acquired and placed in service after September 27, 2017, and meals and entertainment deductions. Based on the Company's evaluation, these regulations did not have a material impact on the income tax provision for the years ended December 31, 2020 and 2019.

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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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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