Income Taxes

For the years ended December 31, 2018, 2017 and 2016, the Company qualified to be taxed as a REIT under the Internal Revenue Code for U.S. federal income tax purposes. As long as the Company qualifies as a REIT, the Company generally will not be subject to U.S. federal income taxes on its taxable income to the extent it annually distributes at least 100% of its taxable income to stockholders and does not engage in prohibited transactions. Certain activities the Company performs may produce income that will not be qualifying income for REIT purposes. The Company has designated its TRSs to engage in these activities. The tables below reflect the taxes accrued at the TRS level and the tax attributes included in the consolidated financial statements.

The income tax provision for the years ended December 31, 2018, 2017 and 2016 is comprised of the following components (dollar amounts in thousands):



	Years Ended December 31,
	2018			2017			2016
Current income tax (benefit) expense
Federal	$	(273	)	$	1,243		$	2,771
State	(7		)	2,130			187
Total current income tax (benefit) expense	(280		)	3,373			2,958
Deferred income tax (benefit) expense
Federal	(480		)	(25		)	104
State	(297		)	7			33
Total deferred income tax (benefit) expense	(777		)	(18		)	137
Total (benefit) provision	$	(1,057	)	$	3,355		$	3,095

The Company’s estimated taxable income differs from the statutory U.S. federal rate as a result of state and local taxes, non-taxable REIT income, valuation allowance and other differences. A reconciliation of the statutory income tax provision to the effective income tax provision for the years ended December 31, 2018, 2017 and 2016, respectively, are as follows (dollar amounts in thousands).



	December 31,
	2018					2017					2016
Provision at statutory rate	$	21,384		21.0	%	$	33,367		35.0	%	$	24,561		35.0	%
Non-taxable REIT loss	(23,720		)	(23.3	)	(29,857		)	(31.3	)	(20,672		)	(29.5	)
State and local tax (benefit) provision	(7		)	—		2,130			2.2		187			0.3
Other	(2,601		)	(2.6	)	1,511			1.6		(502		)	(0.7	)
Valuation allowance	3,887			3.8		(3,796		)	(4.0	)	(479		)	(0.7	)
Total (benefit) provision	$	(1,057	)	(1.1	)%	$	3,355		3.5	%	$	3,095		4.4	%

Deferred Tax Assets and Liabilities

The major sources of temporary differences included in the deferred tax assets and their deferred tax effect as of December 31, 2018 and 2017 are as follows (dollar amounts in thousands):



	December 31, 2018			December 31, 2017
Deferred tax assets
Net operating loss carryforward	$	2,416		$	295
Capital loss carryover	739			—
GAAP/Tax basis differences	3,903			2,237
Total deferred tax assets ⁽¹⁾	7,058			2,532
Deferred tax liabilities
Deferred tax liabilities	6			144
Total deferred tax liabilities ⁽²⁾	6			144
Valuation allowance ⁽¹⁾	(6,069		)	(2,182		)
Total net deferred tax asset	$	983		$	206


⁽¹⁾	Included in receivables and other assets in the accompanying consolidated balance sheets.


⁽²⁾	Included in accrued expenses and other liabilities in the accompanying consolidated balance sheets.

As of December 31, 2018, the Company, through wholly owned TRSs, had incurred net operating losses in the aggregate amount of approximately $7.1 million. The Company’s carryforward net operating losses can be carried forward indefinitely until they are offset by future taxable income. Additionally, as of December 31, 2018, the Company, through one of its wholly owned TRSs, had also incurred approximately $2.2 million in capital losses. The Company's carryforward capital losses will expire in 2023 if they are not offset by future capital gains. At December 31, 2018, the Company has recorded a valuation allowance against certain deferred tax assets as management does not believe that it is more likely than not that these deferred tax assets will be realized.

The Company files income tax returns with the U.S. federal government and various state and local jurisdictions. The Company's federal, state and city income tax returns are subject to examination by the Internal Revenue Service and related tax authorities generally for three years after they were filed. The Company has assessed its tax positions for all open years and concluded that there are no material uncertainties to be recognized.

In addition, based on the Company’s evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements.

On December 22, 2017, H.R.1, informally known as the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. The TCJA made major changes to the Internal Revenue Code which the company has considered in its analysis during the year ended December 31, 2018.

We have recognized the tax effects of the TCJA in the year ended December 31, 2018 through the measurement of deferred tax assets at the reduced corporate tax rate from 35% to 21%. We will continue to analyze and monitor the application of TCJA to our business and continue to assess our provision for income taxes as future guidance is issued.