FEDERAL INCOME TAXES

12 Months Ended

Dec. 31, 2011

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, 2011, 2010 and 2009, 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 Subsidiary (“TRS”) is subject to Federal, state and local income taxes.

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,
	2011		2010		2009
Ordinary income	75	%	100	%	95	%
Qualified dividend	22	%	—	%	—	%
Capital gain	3	%	—	%	5	%
	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, 2011, 2010 and 2009 are summarized as follows:

(dollars in thousands)	2011		2010			2009
TRS income before income taxes	$	376	$	5,716		$	2,671
Provision for income taxes:
Federal	222		2,164			1,025
State and local	59		543			292
TRS net income before noncontrolling interests	95		3,009			1,354
Noncontrolling interests	1,245		(545		)	—
TRS net income	$	1,340	$	2,464		$	1,354

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19. Federal Income Taxes, continued

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)	2011			2010		2009
Federal provision at statutory tax rate	$	128		$	1,943	$	908
TRS State and local taxes, net of federal benefit	20			358		193
Tax effect of:
Permanent differences, net	(279		)	406		138
Restricted stock vesting	266			—		—
Other	146			—		78
REIT state and local income and franchise taxes	193			183		224
Total provision for income taxes	$	474		$	2,890	$	1,541