Income Taxes Schedule of Income Tax Reconciliation (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

The TRS Sub's deferred income taxes represent the tax effect of the differences between the book and tax basis of the assets and liabilities. The deferred tax assets (liabilities) of the TRS Sub include the following (in thousands):



	December 31, 2018			December 31, 2017
Deferred tax liabilities:
Partnership basis	$	(2,210	)	$	(1,209	)
Prepaid expenses	(28		)	—
Deferred tax liabilities	$	(2,238	)	$	(1,209	)

Deferred tax assets:
Property and equipment	$	8,963		$	9,841
Net operating loss carryforwards	7,220			5,805
Federal historic tax credits	631			631
Other deferred tax assets	128			—
Valuation allowance	(14,704		)	(15,068		)
Deferred tax assets	$	2,238		$	1,209

Schedule of Characterization of Cash Dividends Distrubuted [Table Text Block]

For income tax purposes, the dividends paid consist of ordinary income, capital gains, return of capital or a combination thereof. The dividends paid per share were characterized, in accordance with the requirements under the Internal Revenue Code, as follows:



	January 1 through August 31,			For the year ended December 31,
	2017			2016
	Amount (3)		%	Amount (4)		%
Preferred Stock – Series A
Capital gains	$	0.9750	3.26	$	—	—
Cash liquidating distributions (1)	0.4875		1.62	—		—
Non-cash liquidating distributions (2)	28.49		95.12	—		—
Dividend income	—		—	1.03		52.82
Non-dividend distribution	—		—	0.92		47.18
	$	29.9525	100.00	$	1.95	100.00
Common Stock
Capital gains	$	0.12	1.59	$	—	—
Cash liquidating distributions (1)	0.10		1.33	—		—
Non-cash liquidating distributions (2)	7.31		97.08	—		—
Non-dividend distribution	—		—	0.24		100.00
	$	7.53	100.00	$	0.24	100.00


(1)	All cash dividends declared after the execution of the Merger Agreement in April 2017 were characterized as cash liquidating distributions for tax purposes.


(2)	Represents the value per share of the RLJ shares received by FelCor shareholders upon consummation of the Mergers on August 31, 2017.


(3)	The fourth quarter 2016 preferred and common stock distributions were paid on January 31, 2017, so they were treated as 2017 distributions for tax purposes. All 2017 cash dividends declared prior to the execution of the Merger Agreement in April 2017 were designated by FelCor as capital gains dividends.


(4)	The fourth quarter 2015 preferred and common stock distributions were paid on January 29, 2016, so they were treated as 2016 distributions for tax purposes.

Income Taxes

Successor Period

The Company is considered to be a partnership for income tax purposes, and is not subject to federal, state, or local income taxes. Any taxable income or loss will be recognized by the partners. Accordingly, no federal, state, or local income taxes have been reflected in the accompanying consolidated financial statements with respect to the Company.

The Company retains an ownership of one taxable REIT subsidiary related to one hotel property (the "TRS Sub") which is treated as a C-corporation for income tax purposes. The TRS Sub pays federal, state and local income taxes on its net taxable income, and its after-tax net income will be available for distribution to the Company but it is not required to be distributed.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the "Tax Reform Act"). The legislation significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing limitations on net operating loss carryovers, and allowing dividend income from a REIT to be eligible for a 20% qualified business income deduction. The Tax Reform Act permanently reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018.

The Company uses the asset and liability method of accounting for income taxes of the TRS Sub. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the net rate is enacted.

The provision for income taxes of the TRS Sub is different from the amount of income tax expense that is determined by applying the applicable U.S. statutory federal income tax rate to pretax income from continuing operations as a result of the following differences (in thousands):



	For the year ended December 31,			September 1 through December 31,
	2018			2017
Expected TRS Sub federal tax expense at statutory rate	$	15,746		$	1,627
Tax impact of REIT election	(14,805		)	(560		)
Expected TRS Sub tax expense	941			1,067
Change in valuation allowance	(363		)	(879		)
Impact of rate change	—			(188		)
Permanent items	85			—
Other	(663		)	—
TRS Sub income tax expense	$	—		$	—

A reconciliation of the TRS Sub's effective tax rate to the statutory U.S. federal income tax rate is as follows:



	For the year ended December 31,		September 1 through December 31,
	2018		2017
Statutory U.S. federal income tax rate	21.0	%	34.0	%
Impact of REIT election	(19.7	)%	(11.7	)%
Change in valuation allowance	(0.5	)%	(18.4	)%
Impact of rate change	—	%	(3.9	)%
Permanent items	0.1	%	—	%
Impact of provision to return	(0.9	)%	—	%
Effective tax rate of TRS Sub	—	%	—	%



	December 31, 2018			December 31, 2017
Deferred tax liabilities:
Partnership basis	$	(2,210	)	$	(1,209	)
Prepaid expenses	(28		)	—
Deferred tax liabilities	$	(2,238	)	$	(1,209	)

Deferred tax assets:
Property and equipment	$	8,963		$	9,841
Net operating loss carryforwards	7,220			5,805
Federal historic tax credits	631			631
Other deferred tax assets	128			—
Valuation allowance	(14,704		)	(15,068		)
Deferred tax assets	$	2,238		$	1,209

Deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on the consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income, and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is most likely to be utilized in future periods to offset taxable income. As of December 31, 2018 and 2017, the Company had a valuation allowance of approximately $14.7 million and $15.1 million, respectively, related to net operating loss ("NOL") carryforwards, historic tax credits, and other deferred tax assets of the TRS Sub. The Company considered all available evidence, both positive and negative, including cumulative income in recent years and its current forecast of future income in its analysis. The Company recognized a 100% valuation allowance related to the TRS Sub's net deferred tax asset because the Company believed it is more likely than not that the deferred tax assets of the TRS Sub will not be fully realized. The realization of the deferred tax assets associated with the TRS Sub's NOLs and historic tax credits was dependent on projections of future taxable income, for which there was uncertainty when considering the TRS Sub's historic results and the cyclical nature of the lodging industry. Accordingly, no provision or benefit for deferred income taxes is reflected in the accompanying consolidated statements of operations and comprehensive income (loss).

The TRS Sub's NOLs and historic tax credits begin to expire in 2036. Additionally, the annual utilization of these NOLs and historic tax credits is limited pursuant to Sections 382 and 383 of the Internal Revenue Code.

The Company is subject to examination by the U.S. Internal Revenue Service ("IRS") and various state and local jurisdictions. The tax years subject to examination vary by jurisdiction. With few exceptions, as of December 31, 2018, the Company is no longer subject to U.S. federal or state and local tax examinations by tax authorities for the tax years of 2014 and before.

The Company had no accruals for tax uncertainties as of December 31, 2018 and 2017.

Predecessor Period

For the Predecessor period, FelCor LP was a partnership for federal income tax purposes and was not subject to federal income tax. However, under its partnership agreement, FelCor LP was required to reimburse FelCor for any tax payments FelCor was required to make relative to its taxable income or loss. Accordingly, the tax information herein represents the disclosures regarding FelCor and its taxable subsidiaries.

FelCor elected to be treated as a REIT under the federal income tax laws. As a REIT, FelCor generally was not subject to federal income taxation at the corporate level on taxable income that was distributed to its stockholders. FelCor was, however, subject to certain state and local taxes on its income and property and to federal income and excise taxes on its undistributed taxable income. FelCor’s taxable REIT subsidiaries, or TRSs, formed to lease its hotel properties were subject to federal, state and local income taxes. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distributes at least 90% of its annual taxable income to its stockholders. If FelCor fails to qualify as a REIT in any taxable year for which the statute of limitations remains open, it will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) for such taxable year and may not qualify as a REIT for four subsequent years. In connection with FelCor’s election to be treated as a REIT, its charter imposed restrictions on the ownership and transfer of shares of its common stock. It was FelCor LP's intention to make distributions on its units sufficient to enable FelCor to meet its distribution obligations as a REIT.

FelCor accounted for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

The following table reconciles FelCor's TRSs’ GAAP net (loss) income to federal taxable income (in thousands):



	January 1 through August 31,			For the year ended December 31,
	2017			2016
GAAP consolidated net (loss) income attributable to FelCor LP	$	(97,340	)	$	3,405
Loss allocated to FelCor LP unitholders	495			93
GAAP consolidated net (loss) income attributable to FelCor	(96,845		)	3,498
GAAP net loss from REIT operations	105,888			21,332
GAAP net income of taxable subsidiaries	9,043			24,830
Depreciation and amortization (1)	1,571			(12,437		)
Employee benefits not deductible for tax	1,531			(2,965		)
Other book/tax differences	5,480			386
Federal tax income of taxable subsidiaries before utilization of net operating losses	17,625			9,814
Utilization of net operating loss	(17,625		)	(9,814		)
Net federal tax income of taxable subsidiaries	$	—		$	—


(1)	The changes in book/tax differences in depreciation and amortization principally result from book and tax basis differences, differences in depreciable lives and accelerated depreciation methods.

FelCor's state income taxes of $0.5 million and $0.9 million are included in income tax expense in the consolidated statements of operations and comprehensive income (loss) for the period of January 1, 2017 through August 31, 2017 and for the year ended December 31, 2016, respectively.

The following table reconciles the REIT's GAAP net loss to taxable (loss) income (in thousands):



	January 1 through August 31,			For the year ended December 31,
	2017			2016
GAAP net loss from REIT operations	$	(105,888	)	$	(21,332	)
Book/tax differences, net:
Dividend income from TRS	17,794			25,650
Depreciation and amortization (1)	12,908			19,582
Noncontrolling interests	(495		)	(93		)
Gain/loss differences from dispositions	(46,054		)	(16,572		)
Impairment loss not deductible for tax	35,109			26,459
Conversion costs	(2,155		)	(3,233		)
Compensation	20,402			—
Other	10,035			(446		)
Taxable (loss) income (2)	$	(58,344	)	$	30,015


(1)	The book/tax differences in depreciation and amortization primarily result from the differences in depreciable lives and accelerated depreciation methods.


(2)	The dividend distribution requirement is 90% of any taxable income (net of capital gains). For 2017 and 2016, FelCor's distributions were in excess of 100% of taxable income.



	January 1 through August 31,			For the year ended December 31,
	2017			2016
	Amount (3)		%	Amount (4)		%
Preferred Stock – Series A
Capital gains	$	0.9750	3.26	$	—	—
Cash liquidating distributions (1)	0.4875		1.62	—		—
Non-cash liquidating distributions (2)	28.49		95.12	—		—
Dividend income	—		—	1.03		52.82
Non-dividend distribution	—		—	0.92		47.18
	$	29.9525	100.00	$	1.95	100.00
Common Stock
Capital gains	$	0.12	1.59	$	—	—
Cash liquidating distributions (1)	0.10		1.33	—		—
Non-cash liquidating distributions (2)	7.31		97.08	—		—
Non-dividend distribution	—		—	0.24		100.00
	$	7.53	100.00	$	0.24	100.00


(1)	All cash dividends declared after the execution of the Merger Agreement in April 2017 were characterized as cash liquidating distributions for tax purposes.


(2)	Represents the value per share of the RLJ shares received by FelCor shareholders upon consummation of the Mergers on August 31, 2017.


(3)	The fourth quarter 2016 preferred and common stock distributions were paid on January 31, 2017, so they were treated as 2017 distributions for tax purposes. All 2017 cash dividends declared prior to the execution of the Merger Agreement in April 2017 were designated by FelCor as capital gains dividends.


(4)	The fourth quarter 2015 preferred and common stock distributions were paid on January 29, 2016, so they were treated as 2016 distributions for tax purposes.

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

A reconciliation of the TRS Sub's effective tax rate to the statutory U.S. federal income tax rate is as follows:



	For the year ended December 31,		September 1 through December 31,
	2018		2017
Statutory U.S. federal income tax rate	21.0	%	34.0	%
Impact of REIT election	(19.7	)%	(11.7	)%
Change in valuation allowance	(0.5	)%	(18.4	)%
Impact of rate change	—	%	(3.9	)%
Permanent items	0.1	%	—	%
Impact of provision to return	(0.9	)%	—	%
Effective tax rate of TRS Sub	—	%	—	%



	For the year ended December 31,			September 1 through December 31,
	2018			2017
Expected TRS Sub federal tax expense at statutory rate	$	15,746		$	1,627
Tax impact of REIT election	(14,805		)	(560		)
Expected TRS Sub tax expense	941			1,067
Change in valuation allowance	(363		)	(879		)
Impact of rate change	—			(188		)
Permanent items	85			—
Other	(663		)	—
TRS Sub income tax expense	$	—		$	—

The following table reconciles the REIT's GAAP net loss to taxable (loss) income (in thousands):



	January 1 through August 31,			For the year ended December 31,
	2017			2016
GAAP net loss from REIT operations	$	(105,888	)	$	(21,332	)
Book/tax differences, net:
Dividend income from TRS	17,794			25,650
Depreciation and amortization (1)	12,908			19,582
Noncontrolling interests	(495		)	(93		)
Gain/loss differences from dispositions	(46,054		)	(16,572		)
Impairment loss not deductible for tax	35,109			26,459
Conversion costs	(2,155		)	(3,233		)
Compensation	20,402			—
Other	10,035			(446		)
Taxable (loss) income (2)	$	(58,344	)	$	30,015


(1)	The book/tax differences in depreciation and amortization primarily result from the differences in depreciable lives and accelerated depreciation methods.


(2)	The dividend distribution requirement is 90% of any taxable income (net of capital gains). For 2017 and 2016, FelCor's distributions were in excess of 100% of taxable income.

Subsidiaries

Income Taxes [Line Items]

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

The following table reconciles FelCor's TRSs’ GAAP net (loss) income to federal taxable income (in thousands):



	January 1 through August 31,			For the year ended December 31,
	2017			2016
GAAP consolidated net (loss) income attributable to FelCor LP	$	(97,340	)	$	3,405
Loss allocated to FelCor LP unitholders	495			93
GAAP consolidated net (loss) income attributable to FelCor	(96,845		)	3,498
GAAP net loss from REIT operations	105,888			21,332
GAAP net income of taxable subsidiaries	9,043			24,830
Depreciation and amortization (1)	1,571			(12,437		)
Employee benefits not deductible for tax	1,531			(2,965		)
Other book/tax differences	5,480			386
Federal tax income of taxable subsidiaries before utilization of net operating losses	17,625			9,814
Utilization of net operating loss	(17,625		)	(9,814		)
Net federal tax income of taxable subsidiaries	$	—		$	—


(1)	The changes in book/tax differences in depreciation and amortization principally result from book and tax basis differences, differences in depreciable lives and accelerated depreciation methods.