Note 14 -Income Taxes
The following table reconciles our GAAP net income (loss) to estimated REIT taxable income for the years ended December 31, 2017, December 31, 2016 and December 31, 2015.
|
| | | | | | | | | | | |
| For the Years Ended |
| December 31, 2017 | | December 31, 2016 | | December 31, 2015 |
GAAP net income (loss) | $ | 181,154 |
| | $ | (45,517 | ) | | $ | (31,205 | ) |
Book to tax differences: | | | | | |
Credit Risk and Non-Agency Securities | (68,505 | ) | | (60,914 | ) | | — |
|
Interest-Only Securities | 1,216 |
| | (7,818 | ) | | — |
|
Changes in interest rate contracts | (49,930 | ) | | 179,979 |
| | 177,565 |
|
Losses on Security Sales | 8,486 |
| | 18,211 |
| | 11,546 |
|
Other than temporary loss on Agency Securities | 13,707 |
| | 6,540 |
| | — |
|
Amortization of deferred hedging costs | (59,930 | ) | | (47,952 | ) | | (13,731 | ) |
Premium amortization expense on Agency Securities | (468 | ) | | — |
| | — |
|
Bargain purchase price on acquisition of JAVELIN | — |
| | (6,484 | ) | | — |
|
Other | 15 |
| | 19 |
| | 17 |
|
Estimated taxable income | $ | 25,745 |
| | $ | 36,064 |
| | $ | 144,192 |
|
Interest rate contracts are treated as hedging transactions for tax purposes. Unrealized gains and losses on open interest rate contracts are not included in the determination of REIT taxable income. Realized gains and losses on interest rate contracts terminated before their maturity are deferred and amortized over the remainder of the original term of the contract for REIT taxable income.
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| | | | | |
Net capital losses realized | | Amount | | Available to offset capital gains though |
2013 | | (579,322 | ) | | 2018 |
2014 | | (341,850 | ) | | 2019 |
2015 | | (5,182 | ) | | 2020 |
2016 | | (31,204 | ) | | 2021 |
The aggregate tax basis of our assets and liabilities was greater than our total Stockholders’ Equity at December 31, 2017 by approximately $69,175, or approximately $1.65 per common share (based on the 41,877 common shares then outstanding).
We are required and intend to timely distribute substantially all of our REIT taxable income in order to maintain our REIT status under the Code. Total dividend payments to stockholders were $105,289, $126,633 and $182,764 for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, respectively. Our estimated REIT taxable income available for distribution as dividends was $25,745, $36,064 and $144,192 for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, respectively. Our REIT taxable income and dividend requirements to maintain our REIT status are determined on an annual basis. Dividends paid in excess of REIT taxable income for the year (including amounts carried forward from prior years) will generally not be taxable to common stockholders. The portion of the dividends on our common stock which represented non-taxable return of capital was approximately 88.95% in 2017, 81.55% in 2016 and 22.88% in 2015.
Our management is responsible for determining whether tax positions taken by us are more likely than not to be sustained on their merits. We have no material unrecognized tax benefits or material uncertain tax positions.