Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

20. Income Taxes

For the three and nine months ended September 30, 2024 and 2023, the Company qualified to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, 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 condensed consolidated financial statements.

The income tax expense (benefit) for the three and nine months ended September 30, 2024 and 2023, respectively, is comprised of the following components (dollar amounts in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Current income tax expense (benefit)	$	—	$	(2)	$	163	$	254
Deferred income tax expense (benefit)	2,325		(54)		2,393		(313)
Total income tax expense (benefit)	$	2,325	$	(56)	$	2,556	$	(59)

Deferred Tax Assets and Liabilities

The major sources of temporary differences included in the deferred tax assets (liabilities) and their deferred tax effect as of September 30, 2024 and December 31, 2023, respectively, are as follows (dollar amounts in thousands):

	September 30, 2024		December 31, 2023
Deferred tax assets
Net operating loss carryforward	$	8,684	$	7,128
Capital loss carryover	15,806		19,597
GAAP/Tax basis differences	5,959		2,989
Deferred tax assets	30,449		29,714
Less: Valuation allowance	(27,068)		(25,204)
Net deferred tax assets (1)	3,381		4,510
Deferred tax liabilities
GAAP/Tax basis differences	3,276		2,012
Deferred tax liabilities (2)	3,276		2,012
Total net deferred tax asset	$	105	$	2,498

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

(2)Included in other liabilities in the accompanying condensed consolidated balance sheets.

As of September 30, 2024, the Company, through wholly-owned TRSs, had incurred net operating losses in the aggregate amount of approximately $39.1 million. The Company’s carryforward net operating losses can be carried forward indefinitely until they are offset by future taxable income. Additionally, as of September 30, 2024, the Company, through its wholly-owned TRSs, had also incurred approximately $71.3 million in capital losses. The Company's carryforward capital losses will expire between 2025 and 2029 if they are not offset by future capital gains.

At September 30, 2024, 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 change in the valuation for the current year is an increase of approximately $1.9 million. We will continue to monitor positive and negative evidence related to the utilization of the remaining deferred tax assets for which a valuation allowance continues to be provided.

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.

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. To the extent that the Company incurs interest and accrued penalties in connection with its tax obligations, including expenses related to the Company’s evaluation of unrecognized tax positions, such amounts will be included in income tax expense.