The Company operates in such a manner as to qualify as a REIT, under the provisions of the Internal Revenue Code of as amended (the "Code"); therefore, applicable REIT taxable income is included in the taxable income of its shareholders, to the extent distributed by the Company. To maintain REIT status for federal income tax purposes, the Company is generally required to distribute at least

of its REIT taxable income to its shareholders as well as comply, generally, with certain other qualification requirements as defined under the Code. As a REIT, the Company is subject to federal corporate income tax to the extent that it distributes

of its REIT taxable income each year. During and the Company distributed at or in excess of of its REIT taxable income to its stockholders. During and the Company had net capital gains from the sales of real estate properties totaling approximately and respectively. Management decided to retain all or a portion of capital gains in and within the Company and distribute them as is permitted for REITs. However, the retention of capital gains required the Company to make a payment to the U.S. Treasury Department on behalf of shareholders at the highest corporate tax rate () in the total amount of approximately and in and respectively. This tax payment was accrued as dividends payable in the Company’s financial statements as of and Shareholders’ pro-rata portion of the amount paid is to be reflected as tax payments on the individual shareholders’ tax returns.

Taxable income from non-REIT activities managed through the Company's taxable REIT subsidiaries (“TRS”) (Lone Star Golf, Inc., Zalanta Resort at the Village, LLC and East G, LLC) is subject to federal, state and local income taxes. The Company did record a provision for current income taxes related to Lone Star for the years ended and as it was in a net loss position. In addition, deferred taxes related to temporary differences in book and taxable income as well as net operating losses (“NOLs”) of Lone Star would likely be realizable due to Lone Star’s loss history (full amount of deferred tax assets offset by a valuation allowance). The NOLs totaled approximately for Federal and California as of and expire between and

During the Company established a new entity, East G, LLC (“East G”) and contributed an office property that was obtained via foreclosure of a loan in into this new entity along with a unit in the same building that had been purchased in The Company then converted East G into a TRS. taxes have been recorded. Deferred taxes related to temporary differences in book and taxable income were significant and tax loss carryforwards are significant and the deferred taxes will be realized. The Company sold the East G property during and dissolved the LLC.

During the Company converted ZRV into a TRS and contributed additional real estate assets into ZRV. These properties included improved, residential lots previously held within Baldwin Ranch Subdivision, LLC and a medical office condominium complex previously held within AMFU, LLC. The conversion of ZRV into a TRS and contribution of the additional real estate assets resulted in the Company recording a deferred tax asset and income tax benefit in the amount of approximately primarily due to a aggregate remaining difference between the book and tax basis of the subject real estate assets as of During ZRV recorded income tax expense of that was primarily the result of an increase in the valuation allowance recorded against deferred tax assets as a result of higher construction costs and lower expected gains from the sales of ZRV assets in the future and due to a decrease in the Federal corporate tax rate from to in and beyond as a result of the Tax Cuts and Jobs Act signed into law by President Trump on which required ZRV to remeasure its net deferred tax asset at the lower rate.

During the year ended the Company had a taxable gain on sale of a real estate property. The gain was taxable because the subject property was designated as foreclosure property pursuant to the related REIT taxation rules. As a result, the Company recorded income tax expense of approximately for the year ended

As of and the Company has recorded a reserve for any uncertain income tax positions. There has been interest or penalties incurred to date.

As of income tax returns for the calendar years ended through remain subject to examination by IRS and/or any state or local taxing jurisdiction. Additionally, certain state tax returns from the predecessor entity (OMIF) remain open for the short year ended

The components of the income tax expense (benefit) as it relates to the Company’s taxable income (loss) from domestic TRSs during the years ended and were as follows:

A reconciliation of the income tax provision (benefit) based upon the statutory tax rates to the effective rates of our taxable REIT subsidiaries is as follows for the year ended and

Significant components of the Company’s deferred tax assets (liabilities) for its TRS entities are as follows as of and

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes, as well as operating loss and tax credit carryforwards. The Company evaluates the realizability of its deferred tax assets and recognizes a valuation allowance if, based on the available evidence, both positive and negative, it is more likely than that some portion or all of its deferred tax assets will be realized. When evaluating the realizability of its deferred tax assets, the Company considers, among other matters, estimates of expected future taxable income, nature of current and cumulative losses and tax planning strategies available.

Management has estimated future taxable gains and losses on sale of ZRV real estate assets to determine how much of the deferred tax assets are realizable. This realizability analysis is inherently subjective and actual results could differ from these estimates. Based on an assessment of all factors, it was determined that a valuation allowance of and related to Federal and State NOLs and differences in the book and tax basis of assets in ZRV was required as of and respectively, as management does expect that ZRV will generate enough taxable income in the future to realize all of the NOL and basis benefits. The Company’s Federal and California NOLs within ZRV totaled and respectively, as of ZRV has Arizona NOLs of as of however, ZRV did record a deferred tax asset related to the Arizona NOLs as it does expect to file another Arizona tax return, and thus, the NOLs will be used. All of the NOLs expire in and