Income Taxes

Income Tax Expense

The Company’s income tax expense (benefit) for the years ended December 31, 2016, 2015, and 2014 consisted of the following:



	2016				2015			2014
Federal current	$	2,238			$	1,931		$	8,036
Federal deferred	(1,310		)		(34		)	1,354
Foreign current	404				628			1,300
Foreign deferred	293				(114		)	(48		)
State current	782				(528		)	1,361
State deferred	(195		)		(72		)	(3		)
Total income tax expense	$	2,212			$	1,811		$	12,000
Less income tax (expense) benefit allocated to Gain on Dispositions ⁽¹⁾					437			(9,733		)
Income tax expense as reported on the Consolidated Statement of Operations and Comprehensive Income	$	2,212		⁽²⁾	$	2,248		$	2,267


(1)	Amount represents the income taxes incurred as part of the Company's sale of interests in International Plaza in January 2014. The tax on the sale is classified within Gain on Dispositions, Net of Tax on the Consolidated Statement of Operations and Comprehensive Income. In September 2015, an adjustment of $0.4 million was made to reduce the tax recognized as a result of the sale.


(2)	Includes $0.5 million of income taxes recognized at the time of conversion of a portion of the Company's investment in partnership units in Simon Property Group Limited Partnership to common shares of SPG (Note 7).

Net Operating Loss Carryforwards

As of December 31, 2016, the Company had a foreign net operating loss carryforward of $5.4 million. Of the $5.4 million, $0.1 million had a carryforward period of 10 years and the remaining had an indefinite carryforward period.

Deferred Taxes

Deferred tax assets and liabilities as of December 31, 2016 and 2015 were as follows:



	2016			2015
Deferred tax assets:
Federal	$	3,230		$	1,427
Foreign	1,673			1,676
State	935			944
Total deferred tax assets	$	5,838		$	4,047
Valuation allowances	(1,812		)	(1,913		)
Net deferred tax assets	$	4,026		$	2,134
Deferred tax liabilities:
Federal				$	602
Foreign	$	1,124		501
State				70
Total deferred tax liabilities	$	1,124		$	1,173

The Company believes that it is more likely than not the results of future operations will generate sufficient taxable income to recognize the net deferred tax assets. These future operations are primarily dependent upon the Manager's profitability, the timing and amounts of gains on peripheral land sales, the profitability of Taubman Asia's operations, and other factors affecting the results of operations of the Taxable REIT Subsidiaries. The valuation allowances relate to net operating loss carryforwards and tax basis differences where there is uncertainty regarding their realizability.

Tax Status of Dividends

Dividends declared on the Company’s common and preferred stock and their tax status are presented in the following tables. The tax status of the Company’s dividends in 2016, 2015, and 2014 may not be indicative of future periods. The portion of the per share dividends paid in 2016 detailed in each table below as capital gains (long term and unrecaptured Sec. 1250) are designated as capital gain dividends as required by Internal Revenue Code Section 857 (b)(3)(c).



Year	Dividends per common share declared			Return of capital		Ordinary income		Long term capital gain			Unrecaptured Sec. 1250 capital gain
2016	$	2.3800		$	—	$	1.8427	$	0.3929		$	0.1444
2015	2.2600			0.0972		2.1621		0.0004			0.0003
2014	4.7500		⁽¹⁾	0.7057		0.0000		1.8748		⁽²⁾	2.1695		⁽²⁾
2014	2.1600			0.3208		1.7773		0.0287		⁽²⁾	0.0332		⁽²⁾


(1)	Includes a special dividend of $4.75 per share of common stock declared and paid during December 2014, which was declared as a result of the Company's disposition of seven centers to Starwood in October 2014 (Note 2).


(2)	The portion of the per share common dividends paid on December 31, 2014 designated as capital gain (long term and unrecaptured Sec. 1250) dividends for tax purposes is $0.0619 per share of the $0.54 dividend and $4.0443 per share of the $4.75 dividend).



Year	Dividends per Series J Preferred share declared		Ordinary income		Long term capital gain			Unrecaptured Sec. 1250 capital gain
2016	$	1.6250	$	1.2581	$	0.2683		$	0.0986
2015	1.6250		1.6245		0.0003			0.0002
2014	1.6250		0.49072		0.52580		⁽¹⁾	0.60848		⁽¹⁾


(1)	The portion of the per share Series J preferred dividends designated as capital gain (long term and unrecaptured Sec. 1250) for tax purposes is as follows; $0.32178 per share of the $0.40625 paid on June 30, 2014, $0.40625 per share of the $0.40625 paid on September 30, 2014, and $0.40625 per share of the $0.40625 paid on December 31, 2014.



Year	Dividends per Series K Preferred share declared		Ordinary income		Long term capital gain			Unrecaptured Sec. 1250 capital gain
2016	$	1.56250	$	1.2097	$	0.2580		$	0.0948
2015	1.56250		1.5620		0.0003			0.0002
2014	1.56250		0.47185		0.50558		⁽¹⁾	0.58507		⁽¹⁾


(1)	The portion of the per share Series K preferred dividends designated as capital gain (long term and unrecaptured Sec. 1250) for tax purposes is as follows; $0.30939 per share of the $0.39063 paid on June 30, 2014, $0.39063 per share of the $0.39063 paid on September 30, 2014, and $0.39063 per share of the $0.39063 paid on December 31, 2014.

Uncertain Tax Positions

The Company expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2016. The Company has no material interest or penalties relating to income taxes recognized in the Consolidated Statement of Operations and Comprehensive Income for the years ended December 31, 2016, 2015, and 2014 or in the Consolidated Balance Sheet as of December 31, 2016 and 2015. As of December 31, 2016, returns for the calendar years 2013 through 2016 remain subject to examination by U.S. and various state and foreign tax jurisdictions.