INCOME TAXES

On December 31, 2014, CREC merged into Cousins and Cousins formed CTRS. CTRS recorded no income tax expense in 2016 or 2015 and CREC recorded a $20,000 income tax benefit in 2014.

The net income tax benefit differs from the amount computed by applying the statutory federal income tax rate to CTRS' income before taxes for the year ended December 31, 2016, and to CREC’s income before taxes for the years ended 2015 and 2014 as follows ($ in thousands):



	2016					2015					2014
	Amount			Rate		Amount			Rate		Amount			Rate
Federal income tax benefit (expense)	$	(1,159	)	(35	)%	$	778		35	%	$	(1,124	)	(35	)%
State income tax benefit (expense), net of federal income tax effect	(132		)	(4	)%	90			4	%	(125		)	(4	)%
Valuation allowance	1,282			39	%	(833		)	(37	)%	1,644			50	%
State deferred tax adjustment	9			—	%	(35		)	(2	)%	(375		)	(11	)%
Benefit applicable to income (loss) from continuing operations	$	—		—	%	$	—		—	%	$	20		—	%

On December 31, 2014, CREC merged into Cousins and Cousins contributed some of the assets and contracts that were previously owned by CREC to CTRS, a newly formed taxable REIT subsidiary of Cousins. Cousins retained many of CREC's tax benefits, including the significant portion of CREC's Federal and state tax carryforwards. Some of CREC's tax benefits were assumed by CTRS upon the contributions Cousins made to CTRS immediately following CREC's merger into Cousins. The tax effect of significant temporary differences representing deferred tax assets and liabilities of CTRS as of December 31, 2016 and 2015 are as follows (in thousands):



	2016			2015
Income from unconsolidated joint ventures	$	(188	)	$	928
Federal and state tax carryforwards	514			680
Total deferred tax assets	326			1,608
Valuation allowance	(326		)	(1,608		)
Net deferred tax asset	$	—		$	—

A valuation allowance is required to be recorded against deferred tax assets if, based on the available evidence, it is more likely than not that such assets will not be realized. When assessing the need for a valuation allowance, appropriate consideration should be given to all positive and negative evidence related to this realization. This evidence includes, among other things, the existence of current and recent cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, the Company’s history with loss carryforwards and available tax planning strategies.

As of December 31, 2016 and 2015 the deferred tax asset of CTRS equaled $326,000 and $1.6 million, respectively, with a valuation allowance placed against the full amount of each. The conclusion that a valuation allowance should be recorded as of December 31, 2016 and 2015 was based the lack of evidence that CTRS, could generate future taxable income to realize the benefit of the deferred tax assets.