Income Taxes
Our provision for income taxes consists of the following (in thousands):
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2017 | | 2016 | | 2015 |
Current: | | | | | |
State | $ | 500 |
| | $ | 745 |
| | $ | 270 |
|
Federal | — |
| | — |
| | 513 |
|
Foreign | — |
| | — |
| | 2,336 |
|
| 500 |
| | 745 |
| | 3,119 |
|
| | | | | |
Deferred: | | | | | |
Foreign | — |
| | — |
| | (755 | ) |
| — |
| | — |
| | (755 | ) |
| | | | | |
Income tax expense | $ | 500 |
| | $ | 745 |
| | $ | 2,364 |
|
Federal income tax expense for the year ended December 31, 2015 relates to taxes incurred as a result of a taxable built-in gain triggered by the sale of a property that was previously owned by a C corporation. As a result of the disposition of the Australian properties, we incurred net income tax expense of $1.6 million for the year ended December 31, 2015.
A reconciliation of our effective tax rate and the U.S. Federal statutory income tax rate is as follows:
|
| | | | | | | | |
| Year Ended December 31, |
| 2017 | | 2016 | | 2015 |
Taxes at statutory U.S. federal income tax rate | 35.00 | % | | 35.00 | % | | 35.00 | % |
Dividends paid deduction and net operating loss utilization | (35.00 | )% | | (35.00 | )% | | (35.00 | )% |
Federal taxes on built-in gain | — | % | | — | % | | 0.50 | % |
State, local, and foreign income taxes | 1.66 | % | | 0.32 | % | | 1.81 | % |
Effective tax rate | 1.66 | % | | 0.32 | % | | 2.31 | % |
At December 31, 2017, we had net operating loss (NOL) carryforwards of approximately $120 million. These amounts can be used to offset future taxable income, if any. The REIT will be entitled to utilize NOL carryforwards only to the extent that REIT taxable income exceeds our deduction for dividends paid. NOLs arising in taxable years ending before January 1, 2018 can generally be carried forward 20 years. Our NOL carryforwards expire in years 2035 to 2037. We are still analyzing certain aspects of H.R. 1, the Tax Cuts and Jobs Act, and refining our calculations, which could potentially affect the measurement of our NOL carryforwards.