INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Effective Income Tax Rate Reconciliation

The Company’s effective tax rate differs substantially from statutory federal income tax rates primarily due to the benefit of Capstead REIT’s status as a REIT, along with other items affecting the Company’s effective tax rate as illustrated below for the indicated periods (in thousands):

	Year ended December 31
	2017			2016			2015
Income taxes computed at the federal statutory rate	$	27,856		$	29,005		$	37,914
Benefit of REIT status		(27,854	)		(29,003	)		(37,913	)
Income taxes computed on income of Capstead’s sole taxable REIT subsidiary		2			2			1
Alternative minimum tax credit refund receivable		(1,941	)		-			-
Change in deferred asset balance due to change in corporate tax rate		29			-			-
Other change in net deferred income tax assets		(31	)		(2	)		(1	)
Income tax (benefit) provision recorded in miscellaneous other revenue (expense)	$	(1,941	)	$	–		$	–

Components of Deferred Tax Assets and Liabilities

Significant components of the Company’s taxable REIT subsidiary’s deferred income tax assets and liabilities were as follows as of the indicated dates (in thousands):

	December 31
	2017		2016
Deferred income tax assets:
Alternative minimum tax credit	$	-	$	1,941
Net operating loss carryforwards ^(a)		32		55
Other		11		20
		43		2,016
Deferred income tax liabilities		–		–
Net deferred tax assets	$	43	$	2,016
Valuation allowance ^(b)	$	43	$	2,016

(a)	Excludes $3.5 million in remaining net operating loss carryforwards which expire beginning after 2019. Should these carryforwards be utilized, they will be excluded for purposes of calculating the Company’s provision for income taxes. Any such utilization will, however, reduce actual taxes payable.

(b)	Because this subsidiary is not expected to earn significant amounts of taxable income, related net deferred tax assets are fully reserved at December 31, 2017.