Income Taxes:
For income tax purposes, distributions paid to common stockholders consist of ordinary income, capital gains, unrecaptured Section 1250 gain and return of capital or a combination thereof. The following table details the components of the distributions, on a per share basis, for the years ended December 31, 2017, 2016 and 2015 are as follows:
|
| | | | | | | | | | | | | | | | | | | | |
| 2017 | | 2016 (1) | | 2015 (1) |
Ordinary income | $ | 1.98 |
| | 69.0 | % | | $ | 0.94 |
| | 20.8 | % | | $ | 1.20 |
| | 24.8 | % |
Capital gains | 0.51 |
| | 17.8 | % | | 3.24 |
| | 71.4 | % | | 3.64 |
| | 75.2 | % |
Unrecaptured Section 1250 gain | 0.38 |
| | 13.2 | % | | 0.36 |
| | 7.8 | % | | — |
| | — | % |
Return of capital | — |
| | — | % | | — |
| | — | % | | — |
| | — | % |
Dividends paid | $ | 2.87 |
| | 100.0 | % | | $ | 4.54 |
| | 100.0 | % | | $ | 4.84 |
| | 100.0 | % |
_______________________________________________________________________________
| |
(1) | During the year ended December 31, 2015, the Company paid cash dividends of $4.63 per common share. In addition, the Company declared a $2.00 special cash dividend to shareholders of record as of November 12, 2015 which was paid on January 6, 2016 (See Note 13—Stockholders' Equity). Pursuant to relevant U.S. tax rules, $0.21 per common share of this dividend is treated as having been paid by the Company on December 31, 2015, and received by each shareholder of record as of November 12, 2015 on December 31, 2015. The balance of the special cash dividend has been included in the amount of dividends paid for the year ended December 31, 2016. |
The Company has made Taxable REIT Subsidiary elections for all of its corporate subsidiaries other than its Qualified REIT Subsidiaries. The elections, effective for the year beginning January 1, 2001 and future years, were made pursuant to Section 856(l) of the Code.
The income tax provision of the TRSs for the years ended December 31, 2017, 2016 and 2015 are as follows:
|
| | | | | | | | | | | |
| 2017 | | 2016 | | 2015 |
Current | $ | 185 |
| | $ | (176 | ) | | $ | — |
|
Deferred | (15,779 | ) | | (546 | ) | | 3,223 |
|
Income tax (expense) benefit | $ | (15,594 | ) | | $ | (722 | ) | | $ | 3,223 |
|
The income tax provision of the TRSs for the years ended December 31, 2017, 2016 and 2015 are reconciled to the amount computed by applying the Federal Corporate tax rate as follows:
|
| | | | | | | | | | | |
| 2017 | | 2016 | | 2015 |
Book loss for TRSs | $ | 2,094 |
| | $ | 5,254 |
| | $ | 10,681 |
|
Tax at statutory rate on earnings from continuing operations before income taxes | $ | 712 |
| | $ | 1,786 |
| | $ | 3,632 |
|
Change in tax rates | (14,189 | ) | | — |
| | — |
|
State taxes | 109 |
| | 160 |
| | 420 |
|
Other | (2,226 | ) | | (2,668 | ) | | (829 | ) |
Income tax (expense) benefit | $ | (15,594 | ) | | $ | (722 | ) | | $ | 3,223 |
|
The Tax Cuts and Jobs Act of 2017 (“TCJA”), signed into law on December 22, 2017, adjusted the federal corporate tax income rate to 21%. FASB Accounting Standards Codification Topic 740 requires deferred tax assets and liabilities to be measured at the enacted rate expected to apply when temporary differences are to be realized or settled. Accordingly, the Company has remeasured its ending deferred tax asset and reduced the value by $14,189. Additionally, GAAP requires that all adjustments resulting from tax rate changes be recorded to the income statement. Therefore, the Company recorded a $14,189 deferred tax expense in the fourth quarter related to the revaluation of its deferred tax assets and liabilities.
The net operating loss carryforwards are currently scheduled to expire through 2035, beginning in 2025.
The tax effects of temporary differences and carryforwards of the TRSs included in the net deferred tax assets at December 31, 2017 and 2016 are summarized as follows:
|
| | | | | | | |
| 2017 | | 2016 |
Net operating loss carryforwards | $ | 21,398 |
| | $ | 22,335 |
|
Property, primarily differences in depreciation and amortization, the tax basis of land assets and treatment of certain other costs | 5,077 |
| | 12,720 |
|
Other | 2,531 |
| | 3,246 |
|
Net deferred tax assets | $ | 29,006 |
| | $ | 38,301 |
|
For the years ended December 31, 2017, 2016 and 2015 there were no unrecognized tax benefits.
The tax years 2014 through 2016 remain open to examination by the taxing jurisdictions to which the Company is subject. The Company does not expect that the total amount of unrecognized tax benefit will materially change within the next 12 months.