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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2012
Summary of Combined Activity TRS | The following represents the combined activity of the Company’s TRS and its taxable activity in Puerto Rico (in thousands):
|  | For the Year Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Book (loss) income before income taxes — TRS |  | $ | (16,934 | ) |  | $ | 4,738 |  |  | $ | (22,843 | )
Summary of Components of Income Tax (Benefit) Expense | Components of income tax expense (benefit) are as follows:
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | 351 |  |  | $ | (1,775 | )
State and local |  |  | — |  |  |  | — |  |  |  | — |
|  |  | — |  |  |  | 351 |  |  |  | (1,775 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |  |  |  | 45,311 |
State and local |  |  | — |  |  |  | — |  |  |  | 6,663 |
|  |  | — |  |  |  | — |  |  |  | 51,974 |
Total expense (benefit) — TRS |  | $ | — |  |  | $ | 351 |  |  | $ | 50,199 |
Book loss before income taxes — Puerto Rico |  | $ | (19,738 | ) |  | $ | (20,835 | ) |  | $ | (17,276 | )
Current |  | $ | — |  |  | $ | — |  |  | $ | — |
Deferred |  |  | — |  |  |  | — |  |  |  | — |
Total expense (benefit) — Puerto Rico |  | $ | — |  |  | $ | — |  |  | $ | — |
Summary of Differences Between Total Income Tax Expense Statutory Federal Income Tax Rate | The differences between total income tax expense or benefit and the amount computed by applying the statutory federal income tax rate to income before taxes were as follows (in thousands):
|  | For the Year Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Statutory rate of 34% applied to pre-tax (loss) income |  | $ | (5,757 | ) |  | $ | 1,611 |  |  | $ | (7,767 | )
Effect of state and local income taxes, net of federal tax benefit |  |  | (847 | ) |  |  | 237 |  |  |  | (1,142 | )
Valuation allowance increase (decrease) |  |  | 16,808 |  |  |  | (715 | ) |  |  | 58,322 |
Other |  |  | (10,204 | ) |  |  | (782 | ) |  |  | 786 |
Total expense — TRS |  | $ | — |  |  | $ | 351 |  |  | $ | 50,199 |
Effective tax rate |  |  | 0.00 | % |  |  | 7.40 | % |  |  | (219.76 | )%(A)
(A) | The 2010 effective tax rate includes the impact from the recording of the valuation allowance in the fourth quarter 2010. Without this impact, the effective tax rate was approximately 37.59%.
Summary of Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities of the Company’s TRS and Puerto Rico were as follows (in thousands):
|  | For the Year Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Deferred tax assets — TRS |  | $ | 75,450 |  |  | $ | 58,297 |  |  | $ | 58,923 |
Deferred tax assets — Puerto Rico |  |  | 34,041 |  |  |  | — |  |  |  | — |
Deferred tax liabilities — TRS |  |  | (1,035 | ) |  |  | (690 | ) |  |  | (601 | )
Deferred tax liabilities — Puerto Rico |  |  | (26,992 | ) |  |  | — |  |  |  | — |
Valuation allowance — TRS |  |  | (74,415 | ) |  |  | (57,607 | ) |  |  | (58,322 | )
Valuation allowance — Puerto Rico |  |  | (7,049 | ) |  |  | — |  |  |  | — |
Net deferred tax asset(A) |  | $ | — |  |  | $ | — |  |  | $ | — |
(A) | The components of the net deferred tax assets are primarily attributable to net operating losses, Puerto Rico special partnership losses and interest expense, subject to limitations and basis differentials in assets due to purchase price accounting.
Reconciliation of GAAP Net Loss Attributable to Taxable Income | Reconciliation of GAAP net loss attributable to DDR to taxable income is as follows (in thousands):
|  | For the Year Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
GAAP net loss attributable to DDR |  | $ | (25,822 | ) |  | $ | (15,854 | ) |  | $ | (209,358 | )
Plus: Book depreciation and amortization(A) |  |  | 247,084 |  |  |  | 222,751 |  |  |  | 217,035 |
Less: Tax depreciation and amortization(A) |  |  | (185,230 | ) |  |  | (181,935 | ) |  |  | (179,377 | )
Book/tax differences on gains/losses from capital transactions |  |  | (122,101 | ) |  |  | (116,395 | ) |  |  | (103,331 | )
Joint venture equity in (loss) earnings, net(A) |  |  | (23,885 | ) |  |  | 19,190 |  |  |  | (28,659 | )
Dividends from subsidiary REIT investments |  |  | 480 |  |  |  | 954 |  |  |  | 1,609 |
Deferred income |  |  | 8,471 |  |  |  | (4,327 | ) |  |  | 1,937 |
Compensation expense |  |  | (11,325 | ) |  |  | (17,614 | ) |  |  | 1,199 |
Impairment charges |  |  | 153,142 |  |  |  | 128,765 |  |  |  | 172,127 |
Equity derivative instrument valuation |  |  | — |  |  |  | (21,926 | ) |  |  | 40,157 |
Senior Convertible Notes interest expense |  |  | 10,884 |  |  |  | 14,914 |  |  |  | 8,204 |
Miscellaneous book/tax differences, net |  |  | (2,755 | ) |  |  | (12,131 | ) |  |  | (12,007 | )
Taxable income (loss) before adjustments |  |  | 48,943 |  |  |  | 16,392 |  |  |  | (90,464 | )
Less: Capital Gains |  |  | (48,943 | ) |  |  | — |  |  |  | — |
Less: Taxable loss carried forward(B) |  |  | — |  |  |  | — |  |  |  | 90,464 |
Taxable income subject to the 90% dividend requirement |  | $ | — |  |  | $ | 16,392 |  |  | $ | — |
(A) | Depreciation expense from majority-owned subsidiaries and affiliates, which is consolidated for financial reporting purposes but not for tax reporting purposes, is included in the reconciliation item “Joint venture equity in (loss) earnings, net.”
(B) | The Company has net operating loss carryforwards expiring in 2030 of $90.5 million that can offset future undistributed taxable income.
Reconciliation Between Cash Dividends Paid and Dividends Paid Deduction | Reconciliation between cash dividends paid and the dividends paid deduction is as follows (in thousands):
|  | For the Year Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Dividends paid |  | $ | 153,617 |  |  | $ | 75,253 |  |  | $ | 61,204 |
Plus: Deemed dividends on convertible debt |  |  | 7,875 |  |  |  | — |  |  |  | — |
Less: Dividends designated to prior year |  |  | (6,967 | ) |  |  | (6,967 | ) |  |  | (6,967 | )
Plus: Dividends designated from the following year |  |  | 7,030 |  |  |  | 6,967 |  |  |  | 6,967 |
Less: Return of capital |  |  | (112,612 | ) |  |  | (58,861 | ) |  |  | (61,204 | )
Dividends paid deduction |  | $ | 48,943 |  |  | $ | 16,392 |  |  | $ | — |
Summary of Tax Characterization of Common Share Dividends Per Share as Reported to Shareholders | The tax characterization of common share dividends per share as reported to shareholders for the years ended December 31, 2012, 2011, and 2010, are summarized as follows:
2012 Dividends |  | Date Paid |  |  | Gross Ordinary Income |  |  | Capital Gain Distributions |  |  | Return of Capital |  |  | Total Dividends |
4th quarter 2011 |  |  | 01/06/12 |  |  | $ | — |  |  | $ | 0.0122 |  |  | $ | 0.0678 |  |  | $ | 0.0800 |
1st quarter |  |  | 04/03/12 |  |  |  | — |  |  |  | 0.0183 |  |  |  | 0.1017 |  |  |  | 0.1200 |
2nd quarter |  |  | 07/06/12 |  |  |  | — |  |  |  | 0.0183 |  |  |  | 0.1017 |  |  |  | 0.1200 |
3rd quarter |  |  | 10/02/12 |  |  |  | — |  |  |  | 0.0183 |  |  |  | 0.1017 |  |  |  | 0.1200 |
4th quarter |  |  | 01/04/13 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  |  |  |  | $ | — |  |  | $ | 0.0671 |  |  | $ | 0.3729 |  |  | $ | 0.4400 |
2011 Dividends |  | Date Paid |  |  | Gross Ordinary Income |  |  | Capital Gain Distributions |  |  | Return of Capital |  |  | Total Dividends |
4th quarter 2010 |  |  | 01/05/11 |  |  | $ | — |  |  | $ | — |  |  | $ | 0.0200 |  |  | $ | 0.0200 |
1st quarter |  |  | 04/05/11 |  |  |  | — |  |  |  | — |  |  |  | 0.0400 |  |  |  | 0.0400 |
2nd quarter |  |  | 07/06/11 |  |  |  | — |  |  |  | — |  |  |  | 0.0400 |  |  |  | 0.0400 |
3rd quarter |  |  | 10/11/11 |  |  |  | — |  |  |  | — |  |  |  | 0.0600 |  |  |  | 0.0600 |
4th quarter |  |  | 01/06/12 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  |  |  |  | $ | — |  |  | $ | — |  |  | $ | 0.1600 |  |  | $ | 0.1600 |
2010 Dividends |  | Date Paid |  |  | Gross Ordinary Income |  |  | Capital Gain Distributions |  |  | Return of Capital |  |  | Total Dividends |
4th quarter 2009 |  |  | 01/06/10 |  |  | $ | — |  |  | $ | — |  |  | $ | 0.0200 |  |  | $ | 0.0200 |
1st quarter |  |  | 04/06/10 |  |  |  | — |  |  |  | — |  |  |  | 0.0200 |  |  |  | 0.0200 |
2nd quarter |  |  | 07/07/10 |  |  |  | — |  |  |  | — |  |  |  | 0.0200 |  |  |  | 0.0200 |
3rd quarter |  |  | 10/05/10 |  |  |  | — |  |  |  | — |  |  |  | 0.0200 |  |  |  | 0.0200 |
4th quarter |  |  | 01/05/11 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  |  |  |  | $ | — |  |  | $ | — |  |  | $ | 0.0800 |  |  | $ | 0.0800 |
Puerto Rico [Member] |
Summary of Differences Between Total Income Tax Expense Statutory Federal Income Tax Rate | The differences between total income tax expense or benefit and the amount computed by applying the statutory income tax rate to income before taxes with respect to its Puerto Rican activity were as follows (in thousands):
|  | For the Year Ended December 31, |
|  | 2012 |
Statutory rate of 30% applied to pre-tax loss |  | $ | (5,921 | )
Valuation allowance increase |  |  | 7,049 |
Other |  |  | (1,128 | )
Total expense — Puerto Rico |  | $ | — |
Effective tax rate |  |  | 0.00 | %

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