Income Taxes

Piedmont’s income tax basis net income for the years ended December 31, 2013, 2012, and 2011, is calculated as follows (in thousands):



	2013			2012			2011
GAAP basis financial statement net income	$	98,728		$	93,204		$	225,041
Increase (decrease) in net income resulting from:
Depreciation and amortization expense for financial reporting purposes in excess of amounts for income tax purposes	42,374			35,125			47,346
Rental income accrued for income tax purposes less than amounts for financial reporting purposes	(25,964		)	(10,422		)	(9,380		)
Net amortization of above/below-market lease intangibles for financial reporting purposes in excess of amounts for income tax purposes	(4,701		)	(5,324		)	(6,605		)
Gain on disposal of property for financial reporting purposes in excess of amounts for income tax purposes	(35,153		)	(7,967		)	(66,410		)
Taxable income of Piedmont Washington Properties, Inc., in excess of amount for financial reporting purposes	—			2,662			4,515
Other expenses for financial reporting purposes in excess of amounts for income tax purposes	9,045			14,361			(2,072		)
Income tax basis net income, prior to dividends paid deduction	$	84,329		$	121,639		$	192,435

For income tax purposes, dividends to common stockholders are characterized as ordinary income, capital gains, or as a return of a stockholder’s invested capital. The composition of Piedmont’s distributions per common share is presented below:



	2013		2012		2011
Ordinary income	64	%	73	%	61	%
Return of capital	36	%	11	%	12	%
Capital gains	—	%	16	%	27	%
	100	%	100	%	100	%

At December 31, 2013 and 2012, the tax basis carrying value of Piedmont’s total assets was approximately $4.5 billion and $4.1 billion, respectively.

Accrued interest and penalties related to uncertain tax positions are included in accounts payable, accrued expenses, and accrued capital expenditures in the accompanying consolidated balance sheets and the tax liability recorded, including the interest and penalties, was approximately $6.7 million as of December 31, 2013 and 2012. Piedmont recorded no additional expense during the years ended December 31, 2013, 2012, and 2011, respectively, related to such positions. The tax years 2010 to 2013 remain open to examination by various federal and state taxing authorities.