Income Taxes
The Company elected to be taxed as a REIT effective with its tax year ended December 31, 2011, and therefore, the Company will not be subject to federal and state income taxes after this effective date, so long as it distributes 100% of the Company's annual REIT taxable income (which does not equal net income as calculated in accordance with GAAP and determined without regard for the deduction for dividends paid and excluding net capital gains) to its shareholders. For the period preceding this election date, the Company's operations resulted in a tax loss. As of December 31, 2010, the Company had deferred federal and state tax assets totaling approximately $298,100, none of which were based upon tax positions deemed to be uncertain. These deferred tax assets will most likely not be used since the Company elected REIT status; therefore, management has determined that a 100% valuation allowance is appropriate as of December 31, 2017, December 31, 2016 and December 31, 2015.
The income tax characterization of the Company's dividend distributions were as follows:
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| | | | | | | | | |
| | 2017 | | 2016 | | 2015 |
Preferred Stock: | | | | | | |
Ordinary income | | 64.0 | % | | 88.1 | % | | 100.0 | % |
Return of capital | | 27.5 | % | | 10.5 | % | | — | % |
Capital gains | | 8.5 | % | | 1.4 | % | | — | % |
| | | | | | |
Common Stock: | | | | | | |
Ordinary income | | — | % | | — | % | | 33.0 | % |
Return of Capital | | 100.0 | % | | 100.0 | % | | 67.0 | % |