Federal Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Federal Income Taxes

NOTE 11 – FEDERAL INCOME TAXES

Characterization of Distributions

The following table characterizes the distributions paid per common share for the years ended December 31, 2018, 2017 and 2016:

	2018					2017					2016
	Amount		Percent			Amount		Percent			Amount		Percent
Ordinary income	$	0.00000		0.00	%	$	0.00000		0.00	%	$	0.09549		13.26	%
Capital gains		0.00000		0.00	%		0.00000		0.00	%		0.01425		1.98	%
Return of capital		0.72000		100.00	%		0.72000		100.00	%		0.61026		84.76	%
	$	0.72		100	%	$	0.72		100	%	$	0.72		100	%

For the year ended December 31, 2017, total distributions paid by the Company for its Series A Preferred Stock, amounted to $5,667,441 or $1.546875 per share (for income tax purposes, $0.494148 characterized as ordinary income, $0.138204 characterized as capital gains and $0.914523 characterized as return of capital). For the year ended December 31, 2016, total distributions paid by the Company for its Series A Preferred Stock, amounted to $7,556,588 or $2.0625 per share (for income tax purposes, $1.79472 characterized as ordinary income and $0.26778 characterized as capital gains).

For the year ended December 31, 2018, total distributions paid by the Company for its Series B preferred stock, amounted to $7,602,400 or $2.00 per share (for income tax purposes, $1.288868 characterized as ordinary income and $0.711132 characterized as return of capital). For the year ended December 31, 2017, total distributions paid by the Company for its Series B preferred stock, amounted to $7,602,400 or $2.00 per share (for income tax purposes, $0.638896 characterized as ordinary income, $0.178688 characterized as capital gains and $1.182416 characterized as return of capital).

For the year ended December 31, 2018, total distributions paid by the Company for its Series C preferred stock, amounted to $9,703,124 or $1.68750 per share (for income tax purposes, $1.087484 characterized as ordinary income and $0.600016 characterized as return of capital). For the year ended December 31, 2017, total distributions paid by the Company for its Series C preferred stock, amounted to $3,396,094 or $0.590625 per share (for income tax purposes, $0.188674 characterized as ordinary income, $0.052769 characterized as capital gains and $0.349182 characterized as return of capital).

For the year ended December 31, 2018, total distributions paid by the Company for its Series D preferred stock, amounted to $2,744,794 or $1.372397 per share (for income tax purposes, $0.884419 characterized as ordinary income and $0.487978 characterized as return of capital).

In addition to the above, taxable income from non-REIT activities conducted by S&F, a Taxable REIT Subsidiary (“TRS”), is subject to federal, state and local income taxes. Deferred income taxes pertaining to S&F are accounted for using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities and their respective tax bases and for operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and other factors. For the years ended December 31, 2018, 2017 and 2016, S&F had operating losses for financial reporting purposes of $1,203,926, $2,066,587 and $2,307,104, respectively. Therefore, a valuation allowance has been established against any deferred tax assets relating to S&F. For the years ended December 31, 2018, 2017 and 2016, S&F recorded $8,000, $0 and $5,000, respectively, in federal, state and franchise taxes.