Note 16 - Taxable REIT Subsidiaries (TRS)

6 Months Ended

Jun. 30, 2011

Income Tax Disclosure [Text Block]

16. Taxable REIT Subsidiaries (“TRS”)

The Company is subject to federal, state and local income taxes on the income from its TRS activities, which include Kimco Realty Services ("KRS"), a wholly owned subsidiary of the Company, the consolidated entities of FNC Realty Corporation (“FNC”) and Blue Ridge Real Estate Company/Big Boulder Corporation.  The Company is also subject to local taxes on certain Non-U.S. investments.

Income taxes have been provided for on the asset and liability method as required by the FASB’s Income Taxes guidance.  Under the asset and liability method, deferred income taxes are recognized for the temporary differences between the financial reporting basis and the tax basis of the taxable assets and liabilities.

The Company’s deferred tax assets and liabilities, which are included in the caption Other assets and Other liabilities on the accompanying Condensed Consolidated Balance Sheets, at June 30, 2011 and December 31, 2010, were as follows (in thousands):

		June 30, 2011		December 31, 2010
Deferred tax assets:
Tax/GAAP basis differences	$	81,672	$	80,539
Operating losses		42,912		43,700
Related party deferred loss		7,276		7,275
Tax credit carryforwards		4,016		5,240
Non-U.S. tax/GAAP basis differences		24,101		25,375
Valuation allowance		(33,783)		(33,783)
Total deferred tax assets		126,194		128,346
Deferred tax liabilities-U.S.		(10,790)		(10,108)
Deferred tax liabilities-Non-U.S.		(18,632)		(15,619)
Net deferred tax assets	$	96,772	$	102,619

As of June 30, 2011, the Company had net deferred tax assets of approximately $96.8 million. This net deferred tax asset includes approximately $9.1 million for the tax effect of net operating losses, (“NOL”) after the impact of a valuation allowance of $33.8 million, primarily relating to FNC. The partial valuation allowance on the FNC deferred tax asset reduces the deferred tax asset related to NOLs to the amount that is more likely than not realizable.  The Company based the valuation allowance related to FNC on projected taxable income and the expected utilization of remaining net operating loss carryforwards.  Additionally, FNC has approximately $3.0 million of deferred tax assets relating to differences in GAAP book basis and tax basis of accounting.  The Company has foreign net deferred tax assets of $5.5 million, relating to its operations in Canada and Mexico due to differences in GAAP book basis and the basis of accounting applicable to the jurisdictions in which the Company is subject to tax.   The Company’s remaining net deferred tax asset of approximately $79.2 million primarily relates to KRS and consists of (i) $10.8 million in deferred tax liabilities, (ii) $7.3 million related to partially deferred losses, (iii) $4.0 million in tax credit carryforwards, $2.9 million of which expire from 2027 through 2030 and $1.1 million that do not expire, and (iv) $78.7 million primarily relating to differences in GAAP

book basis and tax basis of accounting for (i) real estate assets, (ii) real estate joint ventures, (iii) other real estate investments, (iv) asset impairments charges that have been recorded for book purposes but not yet recognized for tax purposes and (v) other miscellaneous deductible temporary differences.

As of June 30, 2011, the Company determined that no valuation allowance was needed against the $79.2 million net deferred tax asset within KRS. This determination was based upon the Company’s analysis of both positive evidence, which includes future projected income for KRS and negative evidence, which consists of a three year cumulative pre-tax book loss for KRS. The cumulative loss was primarily the result of significant impairment charges taken by KRS during 2010 and 2009.   As a result of this analysis the Company has determined it is more likely than not that KRS’s net deferred tax asset of $79.2 million will be realized and therefore, no valuation allowance is needed at June 30, 2011. If future income projections do not occur as forecasted or the Company incurs additional impairment losses within KRS, the Company will reevaluate the need for a valuation allowance.