XML 43 R27.htm IDEA: XBRL DOCUMENT
v3.20.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes For U.S. federal income tax purposes, we elected to be taxed as a REIT under the Code. To qualify as a REIT, we must meet certain organizational and operational stipulations, including a requirement that we distribute at least 90% of our REIT taxable income, excluding net capital gains, to our stockholders. We currently intend to adhere to these requirements and maintain our REIT status. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes as well as to federal income and excise taxes on our undistributed taxable income. At December 31, 2020, twelve of our hotel properties were leased to TRS lessees and The Ritz-Carlton St. Thomas was owned by our USVI TRS. The TRS entities recognized net book income (loss) before income taxes of $(27.0) million, $31.0 million and $16.4 million for the years ended December 31, 2020, 2019 and 2018, respectively. The following table reconciles the income tax expense at statutory rates to the actual income tax expense recorded (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Income tax (expense) benefit at federal statutory income tax rate of 21% | $ | 5,619 |  |  | $ | (6,509) |  |  | $ | (3,452) |
State income tax (expense) benefit, net of U.S. federal income tax benefit | 3,136 |  |  | 107 |  |  | (248) |
State and local income tax (expense) benefit on pass-through entity subsidiaries | (5) |  |  | (16) |  |  | (64) |
Gross receipts and margin taxes | (13) |  |  | (67) |  |  | (100) |
Benefit of USVI Economic Development Commission credit | 783 |  |  | 5,614 |  |  | 950 |
Other | 311 |  |  | 16 |  |  | (311) |
Valuation allowance | (5,425) |  |  | (909) |  |  | 793 |
Total income tax (expense) benefit | $ | 4,406 |  |  | $ | (1,764) |  |  | $ | (2,432) |
The components of income tax expense are as follows (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |
Federal | $ | 3,431 |  |  | $ | (765) |  |  | $ | (2,536) |
State | 19 |  |  | (235) |  |  | (703) |
Total current income tax (expense) benefit | 3,450 |  |  | (1,000) |  |  | (3,239) |
Deferred: |  |  |  |  |
Federal | 1,262 |  |  | (357) |  |  | (80) |
State | (306) |  |  | (407) |  |  | 887 |
Total deferred income tax (expense) benefit | 956 |  |  | (764) |  |  | 807 |
Total income tax (expense) benefit | $ | 4,406 |  |  | $ | (1,764) |  |  | $ | (2,432) |
For the years ended December 31, 2020, 2019 and 2018, income tax expense included interest and penalties paid to taxing authorities of $7,000, $27,000 and $18,000, respectively. At December 31, 2020 and 2019, we determined that there were no amounts to accrue for interest and penalties due to taxing authorities. At December 31, 2020 and 2019, our net deferred tax asset, included in “other assets,” and net deferred tax liability, included in “accounts payable and accrued expenses,” respectively, on our consolidated balance sheets, consisted of the following (in thousands):
| December 31,
| 2020 |  | 2019
Deferred tax assets (liabilities): |  |  |
Tax intangibles basis greater than book basis | $ | 718 |  |  | $ | 1,101 |
Allowance for doubtful accounts | 50 |  |  | 36 |
Unearned income | 1,314 |  |  | 469 |
Federal and state net operating losses | 14,166 |  |  | 13,344 |
Capital Loss Carryforward | 523 |  |  | 192 |
Other | 399 |  |  | (4) |
Accrued expenses | 465 |  |  | 659 |
Tax property basis greater than book basis | (2,721) |  |  | (2,910) |
Prepaid expenses | (91) |  |  | (2,377) |
Net deferred tax asset | 14,823 |  |  | 10,510 |
Valuation allowance | (14,938) |  |  | (11,581) |
Net deferred tax asset (liability) | $ | (115) |  |  | $ | (1,071) |
At December 31, 2020 and 2019, we recorded a valuation allowanc e of $14.9 million and $11.6 million, res pectively, to partially reserve the deferred tax assets of our TRSs. Primarily as a result of the limitation imposed by the Code on the utilization of net operating losses of acquired subsidiaries and the history of losses of our USVI TRS, we believe it is more likely than not that $14.9 million of our deferred tax assets will not be realized, and therefore, have provided a valuation allowance to reserve against the balances. At December 31, 2020, we had TRSs net operating loss carryforwards for U.S. federal income tax purposes of $68.7 million, of which $54.0 million will begin to expire in 2023. The remainder was generated after December 2017 and is not subject to expiration under the Tax Cuts and Jobs Act. $53.3 million of net operating loss carryforwards are attributable to acquired subsidiaries and are subject to substantial limitation on their use. We do not recognize deferred tax assets and a valuation allowance for the REIT since the REIT distributes its taxable income as dividends to stockholders, and in turn, the stockholders incur income taxes on those dividends. The following table summarizes the changes in the valuation allowance (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Balance at beginning of year | $ | 11,581 |  |  | $ | 14,483 |  |  | $ | 15,422 |
Additions | 3,357 |  |  | — |  |  | — |
Deductions | — |  |  | (2,902) |  |  | (939) |
Balance at end of year | $ | 14,938 |  |  | $ | 11,581 |  |  | $ | 14,483 |
The USVI TRS operates under a tax holiday in the U.S. Virgin Islands, which is effective through December 31, 2028, and may be extended if certain additional requirements are satisfied. The tax holiday is conditional upon our meeting certain employment and investment thresholds. The impact of this tax holiday decreased current foreign taxes by $0, $807,000 and $40,000 for the years ended December 31, 2020, 2019 and 2018, respectively. The benefit of the tax holiday on net income (loss) per share was approximately, $0.00, $0.02 and $0.00 for the years ended December 31, 2020, 2019 and 2018, respectively. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law and includes certain income tax provisions relevant to businesses. The Company is required to recognize the effect on the consolidated financial statements in the period the law was enacted. For the year ended December 31, 2020, the CARES Act allowed us to record a tax benefit of $3.4 million for the 2020 net operating loss at our TRS that will be carried back to prior tax years. On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law, and extended several COVID-19 tax related measures passed as part of the “CARES Act”. The Company is required to recognize the effect on the consolidated financial statements in the period the law was enacted, which is the period ended December 31, 2020. The Consolidated Appropriations Act, 2021 did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2020.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration