XML 44 R25.htm IDEA: XBRL DOCUMENT v3.22.1
Income Taxes
12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
17. Income Taxes
As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders. We have elected to treat certain of our consolidated subsidiaries as TRS pursuant to the Code. TRS may participate in services that would otherwise be considered impermissible for REITs and are subject to federal and state income tax at regular corporate tax rates.
The components of income or loss before taxes for the years ended December 31, 2021, 2020 and 2019, were as follows:
December 31,
202120202019
Domestic$(52,001,000)$6,171,000 $1,193,000 
Foreign(312,000)(386,000)(521,000)
(Loss) income before income taxes$(52,313,000)$5,785,000 $672,000 
The components of income tax benefit or expense for the years ended December 31, 2021, 2020 and 2019 were as follows:
December 31,
202120202019
Federal deferred$(12,033,000)$(4,818,000)$(3,672,000)
State deferred(2,908,000)(932,000)(737,000)
Federal current— (361,000)(29,000)
State current329,000 — (16,000)
Foreign current627,000 612,000 605,000 
Valuation allowances14,941,000 2,421,000 5,373,000 
Total income tax expense (benefit)$956,000 $(3,078,000)$1,524,000 
Current Income Tax
Federal and state income taxes are generally a function of the level of income recognized by our TRS. Foreign income taxes are generally a function of our income on our real estate located in the UK and Isle of Man.
Deferred Taxes
Deferred income tax is generally a function of the period’s temporary differences (primarily basis differences between tax and financial reporting for real estate assets and equity investments) and generation of tax NOL that may be realized in future periods depending on sufficient taxable income.
We recognize the financial statement effects of an uncertain tax position when it is more likely than not, based on the technical merits of the tax position, that such a position will be sustained upon examination by the relevant tax authorities. If the tax benefit meets the “more likely than not” threshold, the measurement of the tax benefit will be based on our estimate of the ultimate tax benefit to be sustained if audited by the taxing authority. As of both December 31, 2021 and 2020, we did not have any tax benefits or liabilities for uncertain tax positions that we believe should be recognized in our accompanying consolidated financial statements.
We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A valuation allowance is established if we believe it is more likely than not that all or a portion of the deferred tax assets are not realizable. As of December 31, 2021 and 2020, our valuation allowance fully reserves and substantially reserves, respectively, the net deferred tax assets due to historical losses and inherent uncertainty of future income. We will continue to monitor industry and economic conditions, and our ability to generate taxable income based on our business plan and available tax planning strategies, which would allow us to utilize the tax benefits of the net deferred tax assets and thereby allow us to reverse all, or a portion of, our valuation allowance in the future.
Any increases or decreases to the deferred income tax assets or liabilities are reflected in income tax (expense) benefit in our accompanying consolidated statements of operations and comprehensive income (loss). The components of deferred tax assets and liabilities as of December 31, 2021 and 2020 were as follows:
December 31,
20212020
Deferred income tax assets:
Fixed assets and intangibles$9,870,000 $5,619,000 
Expense accruals and other17,804,000 13,968,000 
Net operating loss and other carry forwards41,164,000 21,168,000 
Reserves and accruals7,375,000 6,541,000 
Allowances for accounts receivable1,951,000 1,932,000 
Investments in unconsolidated entities2,611,000 2,357,000 
Total deferred income tax assets
$80,775,000 $51,585,000 
Deferred income tax liabilities:
Fixed assets and intangibles$(18,689,000)$(16,840,000)
Other — temporary differences(2,467,000)(2,868,000)
Total deferred income tax liabilities$(21,156,000)$(19,708,000)
Net deferred income tax assets before valuation allowance$59,619,000 $31,877,000 
Valuation allowances(59,619,000)(31,877,000)
Net deferred income tax assets (liabilities)$— $— 
At December 31, 2021 and 2020, we had a NOL carryforward of $165,321,000 and $87,347,000, respectively, related to our TRS. These amounts can be used to offset future taxable income, if any. The NOL carryforwards incurred before January 1, 2018 will begin to expire starting 2035, and NOL carryforwards incurred after December 31, 2017 will be carried forward indefinitely.
Tax Treatment of Distributions (Unaudited)
For federal income tax purposes, distributions to stockholders are characterized as ordinary income, capital gain distributions or nontaxable distributions. Nontaxable distributions will reduce United States stockholders’ basis (but not below zero) in their shares. The income tax treatment for distributions reportable for the years ended December 31, 2021, 2020 and 2019 was as follows:
Years Ended December 31,
202120202019
Ordinary income$7,989,000 26.3 %$— — %$35,294,000 29.9 %
Capital gain— — — — — — 
Return of capital22,406,000 73.7 48,842,000 100 82,731,000 70.1 
$30,395,000 100 %$48,842,000 100 %$118,025,000 100 %
Amounts listed above do not include distributions paid on nonvested shares of our restricted common stock which have been separately reported.