|
14. |
Income Taxes |
For the years ended December 31, 2017, 2016 and 2015, the Company recorded net current tax expense and deferred tax assets related to deferred income at its TRSs. The components of the income tax benefit (expense) for the years ended December 31, 2017, 2016 and 2015 were as follows (in thousands):
|
|
|
Years Ended December 31, |
|
|||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
(245 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
State |
|
|
(523 |
) |
|
|
(351 |
) |
|
|
(378 |
) |
|
Total current expense |
|
|
(768 |
) |
|
|
(351 |
) |
|
|
(378 |
) |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
|
8,826 |
|
|
― |
|
|
― |
|
||
|
State |
|
|
305 |
|
|
― |
|
|
― |
|
||
|
Total deferred benefit |
|
|
9,131 |
|
|
― |
|
|
― |
|
||
|
Income tax benefit |
|
$ |
8,363 |
|
|
$ |
(351 |
) |
|
$ |
(378 |
) |
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. Significant components of the Company’s deferred tax assets as of December 31, 2017 and 2016 are as follows:
|
|
|
2017 |
|
|
2016 |
|
||
|
Carryforwards of net operating loss |
|
$ |
9,381 |
|
|
$ |
9,110 |
|
|
Minimum tax credit carryforward (1) |
|
|
189 |
|
|
― |
|
|
|
Prepaid rent |
|
|
648 |
|
|
|
442 |
|
|
Valuation allowance (2) |
|
|
(1,087 |
) |
|
|
(9,552 |
) |
|
Deferred tax assets, net |
|
$ |
9,131 |
|
|
$ |
— |
|
FOOTNOTES:
|
|
(1) |
The Company expects to be refunded the full minimum tax credit carryforward over the next four years, beginning in the year ending December 31, 2018 through the year ending December 31, 2021. |
|
|
(2) |
The decrease in the valuation allowance across periods relates primarily to a change in judgment about the Company’s ability to realize deferred tax assets in future years, due to its current and foreseeable operations. |
A reconciliation of the income tax benefit (expense) computed at the statutory federal tax rate on income before income taxes is as follows (in thousands):
|
|
|
Years Ended December 31, |
|
|||||||||||||||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||||||||||||||
|
Tax benefit computed at federal statutory rate |
|
$ |
12,136 |
|
|
|
35.00 |
% |
|
$ |
11,002 |
|
|
|
35.00 |
% |
|
$ |
23,701 |
|
|
|
35.00 |
% |
|
Impact of REIT election |
|
|
(13,459 |
) |
|
|
(38.82 |
)% |
|
|
(11,002 |
) |
|
|
(35.00 |
)% |
|
|
(23,701 |
) |
|
|
(35.00 |
)% |
|
State income tax expense net of federal benefit |
|
|
(406 |
) |
|
|
(1.17 |
)% |
|
|
(351 |
) |
|
|
(1.12 |
)% |
|
|
(378 |
) |
|
|
(0.56 |
)% |
|
Effect of change in future tax rates |
|
|
1,861 |
|
|
|
5.37 |
% |
|
― |
|
|
― |
|
|
― |
|
|
― |
|
||||
|
Effect of change in valuation allowance |
|
|
8,231 |
|
|
|
23.74 |
% |
|
― |
|
|
― |
|
|
― |
|
|
― |
|
||||
|
Income tax benefit (expense) |
|
$ |
8,363 |
|
|
|
24.12 |
% |
|
$ |
(351 |
) |
|
|
(1.12 |
)% |
|
$ |
(378 |
) |
|
|
(0.56 |
)% |
|
14. |
Income Taxes (continued) |
The Company’s TRS entities had net operating loss carry-forwards for federal and state purposes of approximately $39.0 million and $48.6 million as of December 31, 2017 and 2016, respectively, to offset future taxable income. If not utilized, the federal net operating loss carry-forwards will begin to expire in 2034, and the state net operating loss carry-forwards will begin to expire in 2019. The Company analyzed its material tax positions and determined that it has not taken any uncertain tax positions. The tax years 2014 through 2017 remain subject to examination by taxing authorities. 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.