INCOME TAXES

Beginning with our inception in 1991, we have elected to be taxed as a REIT under the Internal Revenue Code (the “Code”). We elected that our subsidiary established on September 30, 2012 in connection with the Bickford arrangement (which previously held our ownership interest in an operating company) be taxed as a TRS under provisions of the Code. The TRS was subject to federal and state income taxes like those applicable to regular corporations. As discussed in Note 2, we terminated our participation in the joint venture resident in our TRS on September 30, 2016. Aside from such income taxes which have been applicable to any taxable income in the TRS, we will not be subject to federal income tax provided that we continue to qualify as a REIT and make distributions to stockholders equal to or in excess of 90% of our taxable income.

Per share dividend payments to common stockholders for the last three years are characterized for tax purposes as follows:



(Unaudited)	2018		2017		2016
Ordinary income	$	3.33730	$	2.93054	$	2.67863
Capital gain	—		0.20643		0.92137
Return of capital	0.66270		0.66303		—
Dividends paid per common share	$	4.00	$	3.80	$	3.60

Our consolidated provision for state and federal income tax expense (benefit) for the years ended December 31, 2018, 2017, and 2016 was $138,000, $124,000, and $854,000, respectively. In regard to our TRS, at the conclusion of 2016 we maintained a deferred tax asset of approximately $433,000, all of which had been fully reserved through a valuation allowance. During 2017, as a result of the enactment of a new statutory federal income tax rate, that tax asset has been revalued at $334,000, all of which is still fully reserved.

We have recorded state income tax expense of $138,000, $124,000 and $105,000 or the years ended December 31, 2018, 2017, and 2016, respectively, related to a franchise tax levied by the state of Texas that has attributes of an income tax. Our state income taxes described above are combined in franchise, excise and other taxes in our Consolidated Statements of Income. Income taxes related to the equity interest in the unconsolidated operating company whose interest is owned by our TRS are included in our Consolidated Statements of Income under the caption Income tax expense of taxable REIT subsidiary.

We made state income tax payments of $124,000, $170,000,and $30,000 for the years ended December 31, 2018, 2017, and 2016, respectively.