NOTE 12 - TAXES
Income Tax
The Company has elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code under Sections 856 to 860 and the comparable New Jersey Statutes. Under such provisions, the Company will not be taxed on that portion of its taxable income distributed currently to shareholders, provided that at least 90% of its taxable income is distributed. As the Company has and intends to continue to distribute all of its income currently, no provision has been made for income taxes. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state, and local income taxes.
Federal Excise Tax
The Company does not have a Federal excise tax liability for the calendar years 2017, 2016 and 2015, since it intends to or has distributed all of its annual Federal taxable net income.
Reconciliation Between U.S. GAAP Net Income and Taxable Income
The following table reconciles Net Income Attributable to common shares to taxable income for the years ended September 30, 2017, 2016 and 2015:
|
2017 Estimated (unaudited) |
2016 Actual |
2015 Actual |
||||||||||
| Net income applicable to common shareholders | $ | 22,942,234 | $ | 20,531,888 | $ | 16,998,783 | ||||||
| Book / tax difference on gains realized from capital transactions | (2,311,714 | ) | (4,398,599 | ) | (5,824,405 | ) | ||||||
| Stock compensation expense | 624,706 | 926,465 | 448,895 | |||||||||
| Deferred compensation | -0- | -0- | -0- | |||||||||
| Other book / tax differences, net | 353,285 | 1,298,104 | 2,342,751 | |||||||||
| Taxable income before adjustments | 21,608,511 | 18,357,858 | 13,966,024 | |||||||||
| Add: capital gains | 1,311,714 | 3,643,569 | 5,000,683 | |||||||||
| Estimated taxable income subject to 90% dividend requirement | $ | 22,920,225 | $ | 22,001,427 | $ | 18,966,707 | ||||||
Reconciliation Between Cash Dividends Paid and Dividends Paid Deduction
The following table reconciles cash dividends paid with the dividends paid deduction for the years ended September 30, 2017, 2016 and 2015:
| 2017 | ||||||||||||
|
Estimated (unaudited) |
2016 Actual |
2015 Actual |
||||||||||
| Cash dividends paid | $ | 50,663,829 | $ | 42,034,183 | $ | 35,522,127 | ||||||
| Less: Portion designated capital gains distribution | (1,311,714 | ) | (3,643,569 | ) | (5,000,683 | ) | ||||||
| Less: Return of capital | (10,414,753 | ) | (7,828,595 | ) | (2,939,882 | ) | ||||||
| Estimated dividends paid deduction | $ | 38,937,362 | $ | 30,562,019 | $ | 27,581,562 | ||||||