NOTE 18.

INCOME TAXES

In July 2013, the FASB issued ASU 2013-11, which amends its guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments in this update are effective for annual reporting periods beginning after December 15, 2013. The adoption of these changes did not have a material impact on the Company’s consolidated financial statements.

NOTE 18.

INCOME TAXES (continued)

The provisions for income tax benefit (expense) are summarized as follows:

	2015					2014						2013
	Current		Deferred			Current			Deferred			Current			Deferred
Federal	$	479,671	$	(5,607,970	)	$	(2,233,512	)	$	(1,223,260	)	$	(1,817,112	)	$	264,121
State		185,584		(326,389	)		(302,896	)		(71,195	)		(354,061	)		15,372
Total	$	665,255	$	(5,934,359	)	$	(2,536,408	)	$	(1,294,455	)	$	(2,171,173	)	$	279,493

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The sources of these differences and the related deferred income tax assets (liabilities) are summarized as follows:

	Deferred Tax
	2015			2014
Deferred Income Tax Assets
Depreciation	$	2,833,613		$	2,541,509
Intangible Lease Liabilities		12,336,115			—
Deferred Revenue on Land Sales		4,524,189			—
Deferred Oil Lease Income		405,313			545,179
Deferred Lease Expense		1,003,967			1,147,181
Pension and Other Post Retirement Benefits		—			55,083
Stock Options		1,020,855			621,489
Unrealized Loss on Investment Securities		432,677			—
Impairment Reserves		1,688,979			1,688,979
Other - Net		381,897			80,501
Gross Deferred Income Tax Assets		24,627,605			6,679,921
Less - Valuation Allowance		(415,453	)		(415,453	)
Net Deferred Income Tax Assets		24,212,152			6,264,468
Deferred Income Tax Liabilities
Sales of Real Estate	$	(62,067,529	)	$	(39,635,433	)
Discount on Equity Component of Convertible Debt		(1,150,507	)		—
Basis Difference in Joint Venture		(342,015	)		(342,015	)
Other - Net		(178,507	)		(325,462	)
Total Deferred Income Tax Liabilities		(63,738,558	)		(40,302,910	)
Net Deferred Income Tax Liabilities	$	(39,526,406	)	$	(34,038,442	)

In assessing the realizability of deferred income tax assets, Management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the realization of future taxable income during the periods in which those temporary differences become deductible. We consider past history, the scheduled reversal of taxable temporary differences, projected future taxable income, and tax planning strategies in making this assessment. As of December 31, 2015 and 2014, we believe it is more likely than not that a portion of the Company’s deferred income tax assets will not be realized, and accordingly, a valuation allowance has been provided. As of December 31, 2015 and 2014, the valuation allowance was approximately $415,000.

As of December 31, 2015 and 2014, the valuation allowance relates solely to a basis difference in a joint venture with a wholly owned and fully consolidated subsidiary, and no valuation allowance is provided for charitable contribution carryforwards due to the expectation of full utilization during 2015 and 2014.

NOTE 18.

INCOME TAXES (continued)

Following is a reconciliation of the income tax computed at the federal statutory rate of 35% for 2015, 2014, and 2013:

	Year ended December 31,
	2015			2014			2013
Income Tax (Expense) Benefit Computed at Federal Statutory Rate	$	(4,481,029	)	$	(3,575,138	)	$	(1,558,626	)
Increase (Decrease) Resulting from:
State Income Tax, Net of Federal Income Tax Benefit		(755,481	)		(349,334	)		(149,791	)
Other Reconciling Items		(32,594	)		93,609			(183,263	)
Benefit (Expense) for Income Taxes	$	(5,269,104	)	$	(3,830,863	)	$	(1,891,680	)

The effective income tax rate for each of the three years ended December 31, 2015, 2014, and 2013, including income taxes attributable to the discontinued operations, was 38.9%, 37.5%, and 41.3%, respectively. There were no changes to unrecognized tax benefits during the years ended December 31, 2015, 2014, and 2013.

The Company files a consolidated income tax return in the United States Federal jurisdiction and the States of Arizona, Colorado, California, Florida, Illinois, Georgia, Maryland, North Carolina, Texas, and Washington. The Internal Revenue Service has audited the federal tax returns through the year ended December 31, 2012, with all proposed adjustments settled. The Company recognizes all potential accrued interest and penalties to unrecognized tax benefits in income tax expense. For the years ended December 31, 2015, 2014, and 2013 the Company recognized no uncertain tax positions or accrued interest and penalties for uncertain tax positions.

Net income taxes paid during the years ended December 31, 2015, 2014, and 2013 totaled approximately $1.2 million, $3.0 million, and $1.6 million, respectively.