|
10. |
Income Taxes |
For the year ended December 31, 2017, the Company recorded deferred tax assets and net current tax expense related to deferred income at its TRS. The components of the income tax benefit (expense) for the year ended December 31, 2017 are as follows:
|
|
|
2017 |
|
|
|
Current: |
|
|
|
|
|
Federal |
|
$ |
(111,000 |
) |
|
State |
|
|
(16,200 |
) |
|
Total current expense |
|
|
(127,200 |
) |
|
Deferred: |
|
|
|
|
|
Federal |
|
|
23,319 |
|
|
State |
|
|
5,788 |
|
|
Total deferred benefit |
|
|
29,107 |
|
|
Income tax expense |
|
$ |
(98,093 |
) |
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In December 2017, the Tax Cuts and Jobs Act was signed into law and reduces the U.S. federal corporate tax rate to 21%, effective January 1, 2018. As a result, the Company recorded additional tax expense due to a remeasurement of deferred tax assets, which is included in total deferred tax expense in the table above. The Company did not identify items for which the income tax effects of the Tax Cuts and Jobs Act have not been completed and a reasonable estimate could not be determined as of December 31, 2017. However, the Company’s analysis may be impacted by new legislation, the Congressional Joint Committee Staff, Treasury, or other guidance. Based on the Tax Cuts and Jobs Act as enacted, the Company does not believe there will be further material impacts to its consolidated financial statements but cannot provide assurance as to the outcome of this matter. Significant components of the Company’s deferred tax assets as of December 31, 2017 are as follows:
|
Prepaid and other rent |
|
$ |
29,107 |
|
|
Deferred tax assets |
|
$ |
29,107 |
|
A reconciliation of the income tax expense computed at the statutory federal tax rate on income before income taxes is as follows:
|
|
|
Year Ended |
|
|||||
|
|
|
December 31, 2017 |
|
|||||
|
Tax benefit computed at federal statutory rate |
|
$ |
426,453 |
|
|
|
35.00 |
% |
|
Impact of REIT election |
|
|
(511,104 |
) |
|
|
(41.90 |
)% |
|
Effect of change in future tax rates |
|
|
(3,030 |
) |
|
|
(0.25 |
)% |
|
State income tax expense |
|
|
(10,412 |
) |
|
|
(0.87 |
)% |
|
Income tax expense |
|
$ |
(98,093 |
) |
|
|
(8.02 |
)% |
The Company analyzed its material tax positions and determined that it has not taken any uncertain tax positions. The tax years 2016 and forward remain subject to examination by taxing authorities throughout the United States.