FEDERAL INCOME TAXES

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Federal Income Taxes

Federal Income Taxes

The Company has elected to qualify as a REIT in accordance with Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), and intends at all times to qualify as a REIT under the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its annual REIT taxable income to its shareholders. As a REIT, the Company generally will not be subject to corporate Federal income tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under the Code. As the Company distributed sufficient taxable income for the years ended December 31, 2014, 2013 and 2012, no U.S. Federal income or excise taxes were incurred. If the Company fails to qualify as a REIT in any taxable year, it will be subject to Federal income taxes at the regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for the four subsequent taxable years. Even though the Company qualifies for taxation as a REIT, the Company is subject to certain state and local taxes on its income and property and Federal income and excise taxes on any undistributed taxable income. In addition, taxable income from non-REIT activities managed through the Company’s Taxable REIT Subsidiaries ("TRS") is subject to Federal, state and local income taxes.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19. Federal Income Taxes, continued

Characterization of Distributions:

The Company has determined that the cash distributed to the shareholders is characterized as follows for Federal income tax purposes:

	For the years ended December 31,
	2014		2013		2012
Ordinary income	69	%	87	%	63	%
Qualified dividend	—	%	—	%	—	%
Capital gain	31	%	13	%	37	%
	100	%	100	%	100	%

Taxable REIT Subsidiaries

Income taxes have been provided for using the liability method as required by ASC Topic 740, "Income Taxes." The Company’s TRS income and provision for income taxes for the years ended December 31, 2014, 2013 and 2012 are summarized as follows:

(dollars in thousands)	2014			2013			2012
TRS loss before income taxes	$	(36	)	$	(2,225	)	$	(2,056	)
(Provision) benefit for income taxes:
Federal	(377		)	276			592
State and local	(97		)	71			147
TRS net loss before noncontrolling interests	(510		)	(1,878		)	(1,317		)
Noncontrolling interests	(508		)	267			702
TRS net loss	$	(1,018	)	$	(1,611	)	$	(615	)

The income tax provision differs from the amount computed by applying the statutory federal income tax rate to income before income taxes as follows (not adjusted for temporary book/tax differences):

(dollars in thousands)	2014			2013			2012
Federal benefit at statutory tax rate	$	(12	)	$	(757	)	$	(699	)
TRS state and local taxes, net of federal benefit	(2		)	(117		)	(109		)
Tax effect of:
Permanent differences, net	446			496			809
Prior year overaccrual, net	1			128			(553		)
Restricted stock vesting	(20		)	(2		)	(159		)
Other	61			127			(41		)
REIT state and local income and franchise taxes	155			144			178
Total provision (benefit) for income taxes	$	629		$	19		$	(574	)