XML 37 R24.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

17.

Income Taxes

The Company elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended December 31, 1993.  To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that the Company distribute at least 90% of its taxable income to its shareholders.  It is management’s current intention to adhere to these requirements and maintain the Company’s REIT status.  As a REIT, the Company generally will not be subject to corporate level federal income tax on taxable income it distributes to its shareholders.  As the

Company distributed sufficient taxable income for each of the three years ended December 31, 2021, no U.S. federal income or excise taxes were incurred.  

If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates and may not be able to qualify as a REIT for the four subsequent taxable years.  Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain foreign, state and local taxes on its income and property and to federal income and excise taxes on its undistributed taxable income.  In addition, the Company has a TRS that is subject to federal, state and local income taxes on any taxable income generated from its operational activity.  

In order to maintain its REIT status, the Company must meet certain income tests to ensure that its gross income consists of passive income and not income from the active conduct of a trade or business.  The Company utilizes its TRS to the extent certain fee and other miscellaneous non-real estate-related income cannot be earned by the REIT.  

For the years ended December 31, 2021, 2020 and 2019, the Company made a net payment of $0.6 million, $0.7 million and $0.7 million, respectively, related to taxes.  

The following represents the combined activity of the Company’s TRS (in thousands):

 

 

 

For the Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Book (loss) income before income taxes

 

$

(3,420

)

 

$

(240

)

 

$

7,258

 

Current

 

$

—

 

 

$

39

 

 

$

34

 

Deferred

 

 

—

 

 

 

—

 

 

 

—

 

Total income tax expense

 

$

—

 

 

$

39

 

 

$

34

 

The differences between total income tax expense and the amount computed by applying the statutory income tax rate to income before taxes with respect to its TRS activity were as follows (in thousands):

 

 

 

For the Year Ended December 31,

 

TRS

 

2021

 

 

2020

 

 

2019

 

Statutory Rate

 

 

21

%

 

 

21

%

 

 

21

%

Statutory rate applied to pre-tax (loss) income

 

$

(718

)

 

$

(50

)

 

$

1,524

 

State tax expense net of federal income tax

 

 

—

 

 

 

33

 

 

 

27

 

Deferred tax impact of contributions of assets

 

 

(2,410

)

 

 

(3,617

)

 

 

—

 

Deferred tax impact of tax rate change

 

 

(366

)

 

 

(300

)

 

 

(89

)

Valuation allowance decrease based on impact

   of tax rate change

 

 

366

 

 

 

300

 

 

 

89

 

Valuation allowance (decrease) increase – other deferred

 

 

(1,087

)

 

 

3,854

 

 

 

(1,608

)

Expiration of capital loss carryforward

 

 

3,584

 

 

 

 

 

 

 

 

 

Other

 

 

631

 

 

 

(181

)

 

 

91

 

Total expense

 

$

—

 

 

$

39

 

 

$

34

 

Effective tax rate

 

 

—

%

 

 

(16.20

%)

 

 

0.47

%

Deferred tax assets and liabilities of the Company’s TRS were as follows (in thousands):

 

 

For the Year Ended December 31,

 

 

2021

 

 

2020

 

Deferred tax assets(A)

$

31,844

 

 

$

32,651

 

Deferred tax liabilities

 

(84

)

 

 

(170

)

Valuation allowance

 

(31,760

)

 

 

(32,481

)

Net deferred tax asset

$

—

 

 

$

—

 

 

(A)

At December 31, 2021, primarily attributable to $20.5 million of net operating losses and $3.8 million of book/tax differences in joint venture investments. At December 31, 2020, primarily attributable to $14.8 million of net operating losses, $9.3 million of book/tax differences in joint venture investments and $3.7 million of capital loss carryforward.  The TRS net operating loss carryforwards will expire in varying amounts between the years 2024 and 2035, except for approximately $5.0 million that was generated in 2021 and does not expire.  

Reconciliation of GAAP net income attributable to SITE Centers to taxable income is as follows (in thousands):

 

 

For the Year Ended December 31,

 

 

2021

 

 

2020

 

 

2019

 

GAAP net income attributable to SITE Centers

$

124,935

 

 

$

35,721

 

 

$

100,699

 

Plus: Book depreciation and amortization(A)

 

162,342

 

 

 

154,051

 

 

 

152,707

 

Less: Tax depreciation and amortization(A)

 

(115,735

)

 

 

(105,385

)

 

 

(107,830

)

Book/tax differences on losses from capital transactions

 

(28,114

)

 

 

(45,808

)

 

 

(52,733

)

Joint venture equity (earnings) loss, net(A)

 

(15,480

)

 

 

10,572

 

 

 

(9,189

)

Deferred income

 

(1,158

)

 

 

(13,197

)

 

 

(417

)

Compensation expense

 

11,534

 

 

 

4,031

 

 

 

6,608

 

Impairment charges

 

7,270

 

 

 

24,593

 

 

 

18,914

 

Miscellaneous book/tax differences, net

 

(20,183

)

 

 

549

 

 

 

1,020

 

Taxable income before adjustments

 

125,411

 

 

 

65,127

 

 

 

109,779

 

Less: Net operating loss carryforward

 

(28,576

)

 

 

—

 

 

 

—

 

Taxable income subject to the 90% dividend requirement

$

96,835

 

 

$

65,127

 

 

$

109,779

 

 

(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 (earnings) loss, net.”

Reconciliation between cash and stock dividends paid and the dividends paid deduction is as follows (in thousands):

 

 

For the Year Ended December 31,

 

 

2021

 

 

2020

 

 

2019

 

Dividends paid

$

96,835

 

 

$

98,073

 

 

$

180,092

 

Less: Dividends designated to prior year

 

(5,133

)

 

 

(5,133

)

 

 

(8,383

)

Plus: Dividends designated from the following year

 

5,133

 

 

 

5,133

 

 

 

5,133

 

Less: Return of capital

 

—

 

 

 

(32,946

)

 

 

(67,063

)

Dividends paid deduction

$

96,835

 

 

$

65,127

 

 

$

109,779