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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company has elected to be taxed as a REIT under the applicable provisions of the Code beginning with the year ended December 31, 1985. The Company has also elected for certain of its subsidiaries to be treated as TRSs (the “TRS entities”), which are subject to federal and state income taxes. All entities other than the TRS entities are collectively referred to as the “REIT” within this Note 16. Certain REIT entities are also subject to state and local income taxes.
Distributions with respect to the Company’s common stock can be characterized for federal income tax purposes as ordinary dividends, capital gains, nondividend distributions, or a combination thereof.
The following table shows the characterization of the Company’s annual common stock distributions per share:
Year Ended December 31,
202320222021
Ordinary dividends(1)
$0.909692 $0.872948 $0.152336 
Capital gains(2)(3)
0.116992 0.183208 0.379960 
Nondividend distributions0.173316 0.143844 0.667704 
$1.200000 $1.200000 $1.200000 
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(1)For the year ended December 31, 2023, the amount includes $0.882312 of ordinary dividends qualified as business income for purposes of Code Section 199A and $0.027380 of qualified dividend income for purposes of Code Section 1(h)(11). For the year ended December 31, 2022, all $0.872948 of ordinary dividends qualified as business income for purposes of Code Section 199A. For the year ended December 31, 2021, the amount includes $0.137064 of ordinary dividends qualified as business income for purposes of Code Section 199A and $0.015272 of qualified dividend income for purposes of Code Section 1(h)(11).
(2)For the years ended December 31, 2023, 2022, and 2021, the amount includes $0.036256, $0.017760, and $0.379960, respectively, of unrecaptured Code Section 1250 gain. Pursuant to Treasury Regulation Section 1.1061-6(c), the Company is disclosing additional information related to the capital gain dividends for purposes of Section 1061 of the Code. Code Section 1061 is generally applicable to direct and indirect holders of “applicable partnership interests.” For the year ended December 31, 2023, the “One Year Amounts” and “Three Year Amounts” are each zero, since all capital gains relate to Code Section 1231 gains. For the year ended December 31, 2022, the “One Year Amounts” and “Three Year Amounts” are each 89.6708% of the total capital gain distributions and the remaining capital gain distributions are attributable to Code Section 1231 gains, which are not subject to Code Section 1061. For the year ended December 31, 2021, the “One Year Amounts” and “Three Year Amounts” are each zero, since all capital gains relate to Code Section 1231 gains.
(3)For the years ended December 31, 2023, 2022, and 2021, 100%, 10.3292%, and 100%, respectively, of the capital gain distributions represent gains from dispositions of U.S. real property interests pursuant to Code Section 897 for foreign shareholders.
The Company’s pretax income (loss) from continuing operations for the years ended December 31, 2023, 2022, and 2021 was $325 million, $509 million, and $134 million, respectively, of which $318 million, $527 million, and $150 million was attributable to the REIT entities for the years then ended. The TRS entities subject to tax reported income (losses) before income taxes from continuing operations of $7 million, $(18) million, and $(16) million for the years ended December 31, 2023, 2022, and 2021, respectively.
The total income tax benefit (expense) from continuing operations consists of the following components (in thousands):
Year Ended December 31,
202320222021
Current
Federal$(1,663)$(632)$(126)
State(3,325)(689)(1,003)
Total current$(4,988)$(1,321)$(1,129)
Deferred
Federal$11,682 $3,157 $3,469 
State2,923 2,589 921 
Total deferred$14,605 $5,746 $4,390 
Total income tax benefit (expense) from continuing operations$9,617 $4,425 $3,261 
The Company’s income tax benefit from discontinued operations was zero, $0.3 million, and $1 million for the years ended December 31, 2023, 2022, and 2021, respectively (see Note 4).
The following table reconciles income tax benefit (expense) from continuing operations at statutory rates to actual income tax benefit (expense) recorded (in thousands):
Year Ended December 31,
202320222021
Tax benefit (expense) at U.S. federal statutory income tax rate on income or loss subject to tax$(1,404)$3,698 $3,345 
State income tax benefit (expense), net of federal tax (1,035)911 706 
Gross receipts and margin taxes(1,647)(956)(989)
Return to provision adjustments(90)1,260 (4)
Change in valuation allowance for deferred tax assets13,797 194 203 
Change in tax status of TRS(4)(682)— 
Total income tax benefit (expense) from continuing operations$9,617 $4,425 $3,261 
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table summarizes the significant components of the Company’s deferred tax assets and liabilities from continuing operations (in thousands):
December 31,
202320222021
Deferred tax assets:
Deferred revenue$103,530 $102,504 $104,397 
Net operating loss carryforward54,136 62,280 71,744 
Expense accruals12,324 12,399 14,229 
Real estate850 150 129 
Other 58 689 — 
Total deferred tax assets170,898 178,022 190,499 
Valuation allowance(13,004)(26,098)(35,772)
Deferred tax assets, net of valuation allowance$157,894 $151,924 $154,727 
Deferred tax liabilities:
Real estate$43,488 $52,266 $61,097 
Other818 674 648 
Deferred tax liabilities$44,306 $52,940 $61,745 
Net deferred tax assets$113,588 $98,984 $92,982 
Net deferred tax assets are included in other assets, net on the Consolidated Balance Sheets.
The Company records a valuation allowance against deferred tax assets in certain jurisdictions when it is not more likely than not that it can realize the related deferred tax assets. The deferred tax asset valuation allowance is adequate to reduce the total deferred tax assets to an amount that the Company estimates will “more-likely-than-not” be realized.
As of December 31, 2021 and 2022, the Company recorded a valuation allowance against certain SHOP deferred tax assets generated by net operating losses of its TRS entities. During the year ended December 31, 2023, the Company concluded that it was more likely than not that certain deferred tax assets (primarily net operating loss carryforwards) would be realized. This conclusion was based on recent revisions to estimates of future taxable income for certain TRS entities in connection with the Callan Ridge JV transaction (see also Notes 4 and 8). Accordingly, the Company reversed its deferred tax asset valuation allowance and recognized an income tax benefit of $14 million during the year ended December 31, 2023. As of December 31, 2023, 2022, and 2021, the Company had a deferred tax asset valuation allowance of $13 million, $26 million, and $36 million, respectively.
At December 31, 2023, the Company had a net operating loss (“NOL”) carryforward of $216 million related to the TRS entities. If unused, $15 million will begin to expire in 2035. The remainder, totaling $201 million, may be carried forward indefinitely.
The following table summarizes the Company’s unrecognized tax benefits (in thousands):
December 31,
202320222021
Total unrecognized tax benefits at January 1$— $469 $469 
Gross amount of decreases for prior years’ tax positions— (469)— 
Total unrecognized tax benefits at December 31$— $— $469 
For the years ended December 31, 2023 and 2022, the Company had no unrecognized tax benefits. For the year ended December 31, 2021, the Company had unrecognized tax benefits of $0.5 million, that, if recognized, would reduce the annual effective tax rate.
The Company files numerous U.S. federal, state, and local income and franchise tax returns. With a few exceptions, the Company is no longer subject to U.S. federal, state, or local tax examinations by taxing authorities for years prior to 2020.