XML 44 R27.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
For the years ended December 31, 2021, 2020 and 2019, the Company qualified to be taxed as a REIT under the Internal Revenue Code for U.S. federal income tax purposes. As long as the Company qualifies as a REIT, the Company generally will not be subject to U.S. federal income taxes on its taxable income to the extent it annually distributes at least 100% of its taxable income to stockholders and does not engage in prohibited transactions. Certain activities the Company performs may produce income that will not be qualifying income for REIT purposes. The Company has designated its TRSs to engage in these activities. The tables below reflect the taxes accrued at the TRS level and the tax attributes included in the consolidated financial statements.

The income tax provision (benefit) for the years ended December 31, 2021, 2020 and 2019, respectively, is comprised of the following components (dollar amounts in thousands):
For the Years Ended December 31,
202120202019
Current income tax provision (benefit)
Federal$280 $1,225 $(65)
State5 151 43 
Total current income tax provision (benefit) 285 1,376 (22)
Deferred income tax provision (benefit)
Federal1,339 (244)(245)
State834 (151)(152)
Total deferred income tax provision (benefit)2,173 (395)(397)
Total income tax provision (benefit) $2,458 $981 $(419)

The Company’s estimated taxable income differs from the statutory U.S. federal rate as a result of state and local taxes, non-taxable REIT income, valuation allowance and other differences. A reconciliation of the statutory income tax provision (benefit) to the effective income tax provision (benefit) for the years ended December 31, 2021, 2020 and 2019, respectively, are as follows (dollar amounts in thousands).
For the Years Ended December 31,
202120202019
Provision (benefit) at statutory rate$41,088 21.0 %$(60,381)21.0 %$36,397 21.0 %
Non-taxable REIT income(36,691)(18.8)58,783 (20.4)(37,199)(21.5)
State and local tax provision825 0.4 150 (0.1)43 — 
Other225 0.1 (45)— (620)(0.4)
Valuation allowance(2,989)(1.5)2,474 (0.9)960 0.6 
Total provision (benefit)$2,458 1.2 %$981 (0.4)%$(419)(0.3)%
Deferred Tax Assets and Liabilities

The major sources of temporary differences included in the deferred tax assets and their deferred tax effect as of December 31, 2021 and 2020, respectively, are as follows (dollar amounts in thousands):
December 31, 2021December 31, 2020
Deferred tax assets
Net operating loss carryforward$3,615 $6,024 
Capital loss carryover7,549 4,442 
GAAP/Tax basis differences254 814 
Total deferred tax assets (1)
11,418 11,280 
Deferred tax liabilities
GAAP/Tax basis differences6,681 2 
Total deferred tax liabilities (2)
6,681 2 
Valuation allowance (1)
(5,136)(9,503)
Total net deferred tax (liability) asset$(399)$1,775 

(1)Included in other assets in the accompanying consolidated balance sheets.
(2)Included in other liabilities in the accompanying consolidated balance sheets.

As of December 31, 2021, the Company, through wholly owned TRSs, had incurred net operating losses in the aggregate amount of approximately $10.6 million. The Company’s carryforward net operating losses of approximately $9.7 million can be carried forward indefinitely until they are offset by future taxable income. The remaining $0.9 million of net operating losses will expire between 2036 and 2037 if they are not offset by future taxable income. Additionally, as of December 31, 2021, the Company, through wholly-owned TRSs, had also incurred approximately $22.2 million in capital losses. The Company’s carryforward capital losses will expire between 2023 and 2026 if they are not offset by future capital gains.

As of December 31, 2021, the Company has recorded a valuation allowance against certain deferred tax assets as management does not believe that it is more likely than not that these deferred tax assets will be realized. The change in the valuation for the current year is a decrease of approximately $4.4 million. We will continue to monitor positive and negative evidence related to the utilization of the remaining deferred tax assets for which a valuation allowance continues to be provided.

The Company files income tax returns with the U.S. federal government and various state and local jurisdictions. The Company’s federal, state and city income tax returns are subject to examination by the Internal Revenue Service and related tax authorities generally for three years after they were filed. The Company has assessed its tax positions for all open years and concluded that there are no material uncertainties to be recognized.

Based on the Company’s evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. To the extent that the Company incurs interest and accrued penalties in connection with its tax obligations, including expenses related to the Company’s evaluation of unrecognized tax positions, such amounts will be included in income tax expense.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted in the U.S. This legislation was intended to support the economy during the COVID-19 pandemic with temporary changes to income and non-income based tax laws. For the year ended December 31, 2021, the changes did not have a material impact to our financial statements. We will continue to monitor as additional guidance is issued by the U.S. Treasury Department, the Internal Revenue Service and others.