Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

11. Income Taxes

The components of income tax (provision) benefit for the years ended December 31, 2011, 2010 and 2009 are comprised of the following:

	2011			2010			2009
Current:
Federal.	$	(622	)	$	(893	)	$	38,682
State		(502	)		(2,372	)		1,772
Foreign		(41	)		(95	)		(835	)
Deferred:
Federal		(284	)		163			(15,816	)
State		(2	)		40			(616	)
Foreign		(697	)		(148	)		9
	$	(2,148	)	$	(3,305	)	$	23,196

On August 24, 2009, we received a private letter ruling from the IRS granting favorable loss treatment under Sections 331 and 336 of the Code on the tax liquidation of one of our old taxable REIT subsidiaries. As a result, we completed a transaction on September 1, 2009 such that approximately 75% of the assets formerly held by this taxable REIT subsidiary are now held by a limited liability company which is wholly owned by the Operating Partnership. The remaining 25% of the assets are now held by a partnership for federal income tax purposes and is 99% owned by one of our taxable REIT subsidiaries formed in 2009. On November 6, 2009, legislation was signed that allows businesses with net operating losses for 2008 or 2009 to carry back those losses for up to five years. As a result, we received a refund from the IRS of $40,418 in the fourth quarter of 2009 due to the tax liquidation of one of our old taxable REIT subsidiaries.

Deferred income taxes represent the tax effect of the temporary differences between the book and tax basis of assets and liabilities. Deferred tax assets (liabilities) include the following as of December 31, 2011 and 2010:

	2011			2010
Investments in Joint Ventures	$	15		$	47
Fixed assets		—			1,863
Prepaid rent		45			71
Restricted stock		43			99
Capitalized Interest		—			626
Impairment of Real Estate		5,683			10,196
Foreign net operating loss carrying forward		828			706
Valuation Allowance		(5,078	)		(9,301	)
Other		483			569
Total deferred tax assets, net of allowance	$	2,019		$	4,876
Straight-line rent		(85	)		(510	)
Fixed assets		(1,946	)		(3,397	)
Other		(108	)		(106	)
Total deferred tax liabilities	$	(2,139	)	$	(4,013	)
Total net deferred tax (liability) asset	$	(120	)	$	863

A valuation allowance is recorded if we believe it is more likely than not that all or some portion of our deferred tax assets will not be realized. We do not have projections of future taxable income in the taxable REIT subsidiaries significant enough to allow us to realize our deferred tax assets. Therefore, we have recorded a valuation allowance against our deferred tax assets. An increase or decrease in the valuation allowance that results from a change in circumstances, and which causes a change in our judgment about the realizability of the related deferred tax assets, is included in the current tax provision.

As of December 31, 2011 and 2010, we had net deferred tax (liability) assets of $(120) and $863, after valuation allowances of $5,078 and $9,301, respectively. The decrease in the valuation allowance of $4,223 from December 31, 2010 to December 31, 2011 is primarily related to a decrease in net deferred tax assets and liabilities due to sales of property. As of December 31, 2010 and 2009, we had net deferred tax assets of $863 and $776, after valuation allowances of $9,301 and $1,299, respectively. The increase in the valuation allowance of $8,002 from December 31, 2009 to December 31, 2010 is primarily related to an increase in net deferred tax assets due to the impairment of real estate.

The components of income tax (provision) benefit for the years ended December 31, 2011, 2010 and 2009 are as follows:

	2011			2010			2009
Tax provision associated with income from operations on sold properties which is included in discontinued operations	$	(119	)	$	—		$	(384	)
Tax provision associated with gains and losses on the sale of real estate which is included in discontinued operations		(1,127	)		—			(1,462	)
Tax provision associated with gains and losses on the sale of real estate		(452	)		(342	)		(143	)
Income tax (provision) benefit		(450	)		(2,963	)		25,185
Income tax (provision) benefit	$	(2,148	)	$	(3,305	)	$	23,196

The income tax (provision) benefit pertaining to income from continuing operations and gain on sale of real estate differs from the amounts computed by applying the applicable federal statutory rate as follows:

	2011			2010			2009
Tax (provision) benefit at federal rate related to continuing operations	$	(2,162	)	$	5,141		$	8,574
State tax (provision) benefit, net of federal (provision) benefit		(521	)		(2,320	)		1,849
Non-deductible permanent items, net		(54	)		(58	)		(1,652	)
Change in valuation allowance		1,853			(6,108	)		16,269
Foreign taxes, net		(96	)		(211	)		342
Other		78			251			(340	)
Net income tax (provision) benefit	$	(902	)	$	(3,305	)	$	25,042

Michigan Tax Issue

As of December 31, 2008, we had paid approximately $1,400 (representing tax and interest for the years 1997-2000) to the State of Michigan regarding business loss carryforwards the appropriateness of which was the subject of litigation initiated by us. On December 11, 2007, the Michigan Court of Claims rendered a decision against us regarding the business loss carryforwards. Also, the court ruled against us on an alternative position involving Michigan’s Capital Acquisition Deduction. We filed an appeal to the Michigan Appeals Court in January 2008; however, as a result of the lower court’s decision, an additional approximately $800 (representing tax and interest for the year 2001) had been accrued through June 30, 2009 for both tax and financial statement purposes. On August 18, 2009, the Michigan Appeals Court issued a decision in our favor on the business loss carryforward issue. The Michigan Department of Treasury appealed the decision to the Michigan Supreme Court on September 29, 2009; however, we believed there was a very low probability that the Michigan Supreme Court would accept the case. Therefore, in September 2009 we reversed our accrual of $800 (related to the 2001 tax year) and set up a receivable of $1,400 for the amount paid in 2006 (related to the 1997-2000 tax years), resulting in an aggregate reversal of prior tax expense of approximately $2,200. On April 23, 2010, the Michigan Supreme Court reversed the decision of the Michigan Appeals Court and reinstated the decision of the Michigan Court of Claims. Based on the most recent ruling of the Michigan Supreme Court, we reversed the receivable of $1,400 and paid approximately $800, for a total of approximately $2,200 of tax expense for the year ended December 31, 2010, which is included in continuing operations.