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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

Note 7 — Income Taxes

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities of our taxable entities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax liabilities and assets as of December 31, 2023 and 2022 are as follows (in thousands):

 

 

 

As of December 31,

 

 

 

2023

 

 

2022

 

Deferred tax liabilities:

 

 

 

 

 

 

Real estate and real estate partnership basis differences

 

$

110,379

 

 

$

119,621

 

Lease liability - finance lease

 

 

307

 

 

 

385

 

Other

 

 

245

 

 

 

120

 

Deferred tax assets:

 

 

 

 

 

 

Right-of-use lease asset - finance lease

 

 

386

 

 

 

439

 

Other

 

 

3,363

 

 

 

3,703

 

Net operating, capital, and other loss carryforwards

 

 

3,953

 

 

 

1,109

 

Valuation allowance for deferred tax assets

 

 

(4,664

)

 

 

(2,419

)

Net deferred tax liability

 

$

107,893

 

 

$

117,294

 

Our policy is to include any interest and penalties related to income taxes within Income tax benefit (expense) in our Consolidated Statements of Operations.

Significant components of the income tax benefit (expense) including any interest and penalties related to income taxes are as follows and are classified within Income tax benefit (expense) in our Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021 (in thousands):

 

 

2023

 

 

2022

 

 

2021

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

463

 

 

$

12,499

 

 

$

905

 

State

 

 

(3,813

)

 

 

5,840

 

 

 

(250

)

Total current

 

 

(3,350

)

 

 

18,339

 

 

 

655

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

(7,182

)

 

 

(934

)

 

 

(7,400

)

State

 

 

(2,220

)

 

 

(141

)

 

 

(6,825

)

Total deferred

 

 

(9,402

)

 

 

(1,075

)

 

 

(14,225

)

   Total income tax expense (benefit)

 

$

(12,752

)

 

$

17,264

 

 

$

(13,570

)

Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and income and gains retained by the REIT. For the year ended December 31, 2023, we had consolidated net losses subject to tax of $15.2 million, compared to consolidated net income subject to tax of $88.8 million for the year ended December 31, 2022 and consolidated net loss subject to tax of $31.4 million for the year ended December 31, 2021.

The reconciliation of income tax attributable to operations computed at the United States statutory rate to income tax benefit recognized for the years ended December 31, 2023, 2022, and 2021, is shown below (in thousands):

 

 

2023

 

2022

 

2021

 

 

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

Tax (benefit) expense at United States statutory rates on consolidated income or loss subject to tax

 

$(3,189)

 

21.0%

 

$18,641

 

21.0%

 

$(6,591)

 

21.0%

US branch profits tax on earnings of foreign subsidiary

 

(3,101)

 

20.4%

 

(1,965)

 

(2.2%)

 

(1,084)

 

3.5%

State income tax, net of federal (benefit) expense

 

(8,320)

 

54.8%

 

4,590

 

5.2%

 

(7,075)

 

22.5%

Effects of permanent differences

 

96

 

(0.6%)

 

209

 

0.2%

 

197

 

(0.6%)

Uncertain tax positions

 

—

 

0.0%

 

(4,945)

 

(5.6%)

 

—

 

0.0%

Valuation allowance

 

2,270

 

(14.9%)

 

1,109

 

1.2%

 

840

 

(2.7%)

Other

 

(508)

 

3.3%

 

(375)

 

(0.4%)

 

143

 

(0.5%)

Change in Tax Rate

 

—

 

0%

 

—

 

0%

 

—

 

0%

   Total income tax benefit

 

$(12,752)

 

84.0%

 

$17,264

 

19.4%

 

$(13,570)

 

43.2%

Income taxes paid totaled approximately $1.7 million, $22.9 million, and $2.9 million for the years ended December 31, 2023, 2022, and 2021, respectively.

At December 31, 2023, we had federal and state net operating loss carryforwards ("NOLs"), for which the deferred tax asset was approximately $3.9 million, before a valuation allowance of $3.4 million. The NOLs expire in the years ended 2032 to 2042. Subject to certain separate return limitations, we may use these NOLs to offset a portion of state taxable income generated by our TRS entities.

For income tax purposes, dividends paid to holders of Common Stock primarily consist of ordinary income, capital gains, qualified dividends, unrecaptured Section 1250 gains, or a combination thereof. For the years ended December 31, 2023, 2022, and 2021, tax attributes of dividends per share held for the entire year were estimated to be as follows (unaudited):

 

 

 

2023

 

 

2022

 

 

2021

 

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

Ordinary income

 

$

—

 

 

 

0.0

%

 

$

0.01

 

 

 

53.5

%

 

$

—

 

 

 

0.0

%

Capital gains

 

 

—

 

 

 

0.0

%

 

 

0.01

 

 

 

46.5

%

 

 

—

 

 

 

0.0

%

Qualified dividends

 

 

—

 

 

 

0.0

%

 

 

—

 

 

 

0.0

%

 

 

—

 

 

 

0.0

%

Unrecaptured § 1250 gain

 

 

—

 

 

 

0.0

%

 

 

—

 

 

 

0.0

%

 

 

—

 

 

 

0.0

%

Return of capital

 

 

—

 

 

 

0.0

%

 

 

—

 

 

 

0.0

%

 

 

—

 

 

 

0.0

%

Balance at December 31,

 

$

—

 

 

 

0.0

%

 

$

0.02

 

 

 

100.0

%

 

$

—

 

 

 

0.0

%

 

A reconciliation of the beginning and ending balance of our unrecognized tax benefits is presented below and is included in Accrued liabilities and other in our Consolidated Balance Sheets (in thousands):

Because the statute of limitations has not yet elapsed, our United States federal income tax returns for the year ended December 31, 2020, and subsequent years and certain of our state income tax returns for the year ended December 31, 2020, and subsequent years are currently subject to examination by the IRS or other taxing authorities. If recognized, the unrecognized tax benefits would affect our effective tax rate.

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Balance at January 1,

 

$

2,135

 

 

$

7,038

 

Additions based on tax positions in prior years

 

 

52

 

 

 

427

 

Lapse of applicable statute of limitations

 

 

(95

)

 

 

(5,330

)

Balance at December 31,

 

$

2,092

 

 

$

2,135

 

In accordance with the accounting requirements for stock-based compensation, we may recognize tax benefits in connection with the exercise of stock options by employees of our TRS entities and the vesting of restricted stock awards. We recognize the tax effects related to stock-based compensation through earnings in the period the compensation is recognized.