As discussed in Note 2, the Company operates in compliance with REIT requirements for federal income tax purposes. As a REIT, the Company must distribute at least 90 percent of its taxable income (including dividends paid to it by its TRSs). In addition, the Company must meet a number of other organizational and operational requirements. It is management’s intention to adhere to these requirements and maintain the Company’s REIT status. Most states where we operate conform to the federal rules recognizing REITs. On August 1, 2019, the Company issued OP Units of the Operating Partnership to unrelated third parties. As a result, the Operating Partnership is now a regarded partnership under federal tax law, and the Operating Partnership’s accompanying consolidated financial statements include the related provision balances for federal income taxes. Certain subsidiaries have made an election with the Company to be treated as TRSs in conjunction with the Company’s REIT election; the TRS elections permit us to engage in certain business activities in which the REIT may not engage directly. A TRS is subject to federal and state income taxes on the income from these activities. A provision for taxes of the TRSs and of foreign branches of the REIT is included in our consolidated financial statements.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation in the form of the Tax Cuts and Jobs Act (TCJA) that significantly revised the U.S. tax code effective January 1, 2018 by, among other things, lowering the corporate income tax rate from a top marginal rate of 35% to a flat 21%, imposing a mandatory one-time deemed repatriation of unremitted foreign earnings (commonly referred to as the “transition tax”), limiting deductibility of interest expense and certain executive compensation, and implementing a territorial tax system. The full impact of this change in tax law is final and the Company completed its accounting for the tax effects of the TCJA as of December 31, 2018. As a result of adopting the TCJA, a $3.8 million non-recurring tax benefit was recognized in 2018 for the refund of alternative minimum tax credits.

The Company recorded an opening deferred tax liability of $9.6 million as part of its preliminary purchase price allocation on the acquisitions. This deferred tax liability primarily arose from book to tax basis differences in land, buildings and equipment and intangible assets acquired offset by certain liabilities assumed in the acquisition. Purchase accounting related to the deferred income tax assets and liabilities acquired in the acquisitions is preliminary and subject to change as additional information is obtained.

The Company continues to assert that the undistributed earnings of its Argentine subsidiary are permanently reinvested. The Company changed its assertion for the earnings of its Canadian subsidiaries in 2018 due to the Company’s plans to remit cash in the future. During 2019 the Company recognized an amount of deferred tax liability related to the outside basis difference of $0.4 million in its Canadian subsidiaries. The Company plans on liquidating its Hong Kong subsidiary in 2020 and is, therefore, no longer asserting permanent reinvestment. However, the outside basis difference cannot be monetized in the US and, as a result, the associated deferred tax asset is not realizable in the near future. No additional income taxes have been provided for any additional outside basis difference inherent in the other foreign entities, as these amounts continue to be indefinitely reinvested in foreign operations. Undistributed earnings of the Argentine subsidiary amounted to approximately $13.8 million at December 31, 2019.

The global intangible low-taxed income (GILTI) provisions of the TCJA impose a tax on the income of certain foreign subsidiaries in excess of a specified return on tangible assets used by the foreign companies. The Company continues to account for the GILTI inclusion as a period cost and thus has not recorded any deferred tax liability associated with GILTI. There was no taxable deemed dividend recorded for the Company for the 2019 tax year. The amount of taxable deemed dividend recorded for the Company for the 2018 tax year is $0.2 million. Also, as a result of IRS guidance issued during the third quarter of 2018, the Company now includes any GILTI as REIT qualified income.



	2019			2018			2017
	(In thousands)
Current
U.S. federal	$	(20	)	$	4,424		$	(4,848	)
State	(670		)	(353		)	(644		)
Foreign	(4,854		)	(3,604		)	(7,559		)
Total current portion	(5,544		)	467			(13,051		)

Deferred
U.S. federal	7,701			2,094			2,277
State	2,217			494			(72		)
Foreign	783			564			1,453
Total deferred portion	10,701			3,152			3,658
Total income tax benefit (expense)	$	5,157		$	3,619		$	(9,393	)

Income tax benefit (expense) attributable to income (loss) before income taxes differs from the amounts computed by applying the U.S. statutory federal income tax rate of 21% to income (loss) before income taxes. The reconciliation between the statutory rate and reported amount is as follows:



	2019			2018			2017
	(In thousands)
Income taxes at statutory rates	$	(9,031	)	$	(9,317	)	$	(2,987	)
Earnings (loss) from REIT - not subject to tax	9,526			9,015			(425		)
State income taxes, net of federal income tax benefit	(542		)	(187		)	(445		)
Provision to return	2			360			(205		)
Rate and permanent differences on non-U.S. earnings	(971		)	(1,228		)	668
Change in valuation allowance	2,761			(2,227		)	2,950
Non-deductible expenses	3,462			4,021			(2,345		)
Change in uncertain tax positions	(367		)	347			94
Effect of Tax Cuts and Jobs Act	—			3,797			(3,113		)
REIT excise tax	—			—			(4,772		)
Other	317			(962		)	1,187
Total	$	5,157		$	3,619		$	(9,393	)



	2019			2018
	(In thousands)
Deferred tax assets:
Net operating loss and credits carryforwards	$	11,806		$	14,062
Accrued expenses	26,911			25,889
Share-based compensation	4,618			4,709
Lease obligations	9,674			—
Other assets	4,420			241
Total gross deferred tax assets	57,429			44,901
Less: valuation allowance	(16,043		)	(19,627		)
Total net deferred tax assets	41,386			25,274

Deferred tax liabilities:
Intangible assets and goodwill	(8,739		)	(5,628		)
Property, buildings and equipment	(38,358		)	(35,672		)
Lease right-of-use assets	(9,674		)	—
Other liabilities	(1,316		)	(1,144		)
Total gross deferred tax liabilities	(58,087		)	(42,444		)
Net deferred tax liability	$	(16,701	)	$	(17,170	)

As of December 31, 2019, the Company has gross U.S. federal net operating loss carryforwards of approximately $41.8 million, of which $20.4 million was generated prior to 2018 and will expire between 2032 and 2036. These losses are subject to an annual limitation under IRC section 382 as a result of our IPO and another ownership change experienced in March of 2019; however the limitation should not impair the Company’s ability to utilize the losses. The remaining $21.4 million was generated after 2017 and is subject to new laws as set forth by the TCJA and has no expiration date, but can only be utilized to offset up to 80% of future taxable income annually. The Company has gross state net operating loss carryforwards of approximately $36.1 million from its TRSs, which will expire at various times between 2020 and 2039. The Company has an Alternative Minimum Tax credit carryforward remaining in the amount of $2.2 million that can be used to offset regular tax until 2021 or any unused credit will continue to be partially refunded in 2019 and 2020 and fully refundable by 2021. Additionally, the Company has a federal Research and Experimentation Credit of approximately $0.9 million that will expire between 2036 and 2039.

Annually we consider whether it is more-likely-than-not that the deferred tax assets will be realized. In making this assessment, we consider recent operating results, the expected scheduled reversal of deferred tax liabilities, projected future taxable benefits and tax planning strategies. In performing our quarterly valuation allowance assessment during 2019, we concluded that certain deferred tax liabilities totaling $9.6 million from acquisitions during the year would be available to offset deferred tax assets for one of our U.S. TRSs that were historically subject to a valuation allowance. These deferred tax liabilities are are expected to turn and subsequently generate taxable income in the future. The $9.6 million benefit was offset by a $6.0 million increase to the valuation allowance for additional deferred tax assets created by that TRS. Consequently, we reduced the valuation allowance by $3.6 million from $19.6 million in 2018 to $16.0 million in 2019 associated with these deferred tax assets.



	Tax			Interest			Penalties			Total
	(In thousands)
Balance at December 31, 2016*	$	857		$	19		$	8		$	884
Increases related to current-year tax positions	—			3			—			3
Decreases related to prior-year tax positions	—			(4		)	(8		)	(12		)
Decreases due to lapse in statute of limitations	(73		)	(12		)	—			(85		)
Balance at December 31, 2017*	784			6			—			790
Decreases due to lapse in statute of limitations	(353		)	(6		)	—			(359		)
Balance at December 31, 2018*	431			—			—			431
Increase related to current-year tax positions	367			—			—			367
Decreases due to lapse in statute of limitations	(431		)	—			—			(431		)
Balance at December 31, 2019*	$	367		$	—		$	—		$	367

The Company’s unrecognized tax benefits include exposures related to positions taken on U.S. federal, state, and foreign income tax returns as of December 31, 2019. Due to the lapse in statutes of limitations during 2019, the Company reduced its unrecognized tax benefits related to U.S. federal and state exposures to zero offset by $0.4 million for a new position taken in a foreign jurisdiction at the end of 2019.

In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing authorities and the Company has accrued a liability when it believes it is more likely than not that the tax position claimed on tax returns will not be sustained by the taxing authorities on the technical merits of the position. Changes in the recognition of the liability are reflected in the period in which the change in judgment occurs.

As of December 31, 2019, the Company is generally no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for years before 2016. However, for U.S. income tax purposes, the 2012 and 2013 tax years were open, to the extent that net operating losses were generated in those years and continue to be subject to adjustments from taxing authorities in the tax year they are utilized.