The Company indirectly owns 100% of the equity of multiple domestic taxable REIT subsidiaries (collectively “TRSs”), including certain of its TRTX 2018-FL1, TRTX 2018-FL2 and TRTX 2019-FL3 subsidiaries. TRSs are subject to applicable U.S. federal, state, local and foreign income tax on their taxable income. In addition, as a REIT, the Company also may be subject to a 100% excise tax on certain transactions between it and its TRSs that are not conducted on an arm’s-length basis. The Company files income tax returns in the United States federal jurisdiction as well as various state and local jurisdictions. The filings are subject to normal reviews by taxing authorities until the related statute of limitations expires. The years open to examination generally range from 2017 to present.

The Company is subject to the income and indirect tax laws of the U.S., its states and municipalities in which the Company has significant business operations. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. The Company must make judgments and interpretations about the application of these inherently complex tax laws when determining the provision for income taxes and the expense for indirect taxes and must also make estimates about when certain items affect taxable income in the various tax jurisdictions. Disputes over interpretations of the tax laws may be settled with the taxing authority upon examination or audit. The Company periodically evaluates the likelihood of assessments in each taxing jurisdiction and unrecognized tax benefits related to potential losses that may arise from tax audits. As of December 31, 2020 and 2019, the Company has not accrued any liabilities for unrecognized tax benefits in its financial statement. The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. The Company recognizes interest and penalties on unrecognized tax benefits in other expense.

The Company’s policy is to classify interest and penalties associated with underpayment of U.S. federal and state income taxes, if any, as a component of general and administrative expense on its consolidated statements of income (loss) and comprehensive income (loss). For the years ended December 31, 2020 and 2019, the Company did not have interest or penalties associated with the underpayment of any income taxes.

The following table details the income tax treatment for the Company’s common stock and Class A common stock dividends declared as follows:

	Year Ended December 31,
	2020		2019		2018
Ordinary income dividends	$	1.21	$	1.72	$	1.70
Capital gain dividends		—		—		0.01
Total dividends⁽¹⁾	$	1.21	$	1.72	$	1.71

For the twelve months ended December 31, 2020 and 2019, the Company incurred no state or local tax relating to its TRSs. For the twelve months ended December 31, 2020, 2019 and 2018, the Company recognized $0.3 million, $0.6 million, and $0.3 million, respectively, of federal, state and local tax expense. At December 31, 2020, 2019 and 2018, the Company’s effective tax rate was 0.2%, 0.5% and 0.3%, respectively.

As of December 31, 2020 and 2019, no deferred income tax assets or liabilities were recorded for the operating activities of the Company’s TRSs.

From March 23, 2020 through April 2020, the Company sold all its CRE debt securities with an aggregate face value of $969.8 million, generating gross sales proceeds of $766.4 million. The Company recorded losses from these sales of $203.4 million recognized as expense in Securities Impairments on the consolidated statement of income and comprehensive income, which are expected to be available to offset any capital gains of the Company in 2020 and, to the extent those capital losses exceed the Company’s capital gains in future years. The Company does not expect these losses to reduce the amount that the Company will be required to distribute under the requirement that the Company distribute to the Company’s stockholders at least 90% of the Company’s REIT taxable income (computed without regard to the deduction for dividends paid and excluding net capital gain) each year in order to continue to qualify as a REIT.