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Summary of Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 31, 2018
Summary Of Significant Accounting Policies [Abstract]  
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology

The fair value of the option grants are recognized over the requisite service/vesting period of the options.  The fair value for the Company’s share options was estimated at the time the share options were granted using the Black-Scholes option pricing model with the primary grant in each year having the following weighted average assumptions:

 

 

 

2018

 

 

2017

 

 

2016

 

Expected volatility (1)

 

 

14.8

%

 

 

15.3

%

 

 

26.3

%

Expected life (2)

 

5 years

 

 

5 years

 

 

5 years

 

Expected dividend yield (3)

 

 

3.09

%

 

 

3.08

%

 

 

3.04

%

Risk-free interest rate (4)

 

 

2.52

%

 

 

1.93

%

 

 

1.27

%

Option valuation per share

 

$

6.15

 

 

$

5.86

 

 

$

13.02

 

 

(1)

Expected volatility – For the 2018 and 2017 grants, estimated based on the historical five-year volatility (the period matching the expected life) of EQR’s share price measured on a monthly basis. For the 2016 grant, estimated based on the historical ten-year volatility of EQR’s share price measured on a monthly basis.  This change in estimate reflects the Company’s belief that the historical five-year period provides a better estimate of the expected volatility in EQR shares over the expected life of the options.

(2)

Expected life – Approximates the actual weighted average life of all share options granted since the Company went public in 1993.

(3)

Expected dividend yield – Calculated by averaging the historical annual yield on EQR shares for a period matching the expected life of each grant, with the annual yield calculated by dividing actual regular dividends (excluding any special dividends) by the average price of EQR’s shares in a given year.

(4)

Risk-free interest rate – The most current U.S. Treasury rate available prior to the grant date for a period matching the expected life of each grant.
Allocation Of Income Franchise And Excise Taxes In Consolidated Statements Of Operations

The Company provided for income, franchise and excise taxes allocated as follows in the consolidated statements of operations and comprehensive income for the years ended December 31, 2018, 2017 and 2016 (amounts in thousands):

  

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

 

Income and other tax expense (benefit) (1)

 

$

878

 

 

$

478

 

 

$

1,613

 

Discontinued operations, net (2)

 

 

—

 

 

 

—

 

 

 

12

 

Provision for income, franchise and excise taxes (3)

 

$

878

 

 

$

478

 

 

$

1,625

 

 

(1)

Primarily includes state and local income, excise and franchise taxes.

(2)

Primarily represents state and local income, excise and franchise taxes on operating properties sold prior to January 1, 2014 and included in discontinued operations.  The amounts included in discontinued operations for the year ended December 31, 2016 represent trailing activity for properties sold in 2013 and prior years.  None of the properties sold during the years ended December 31, 2018, 2017 and 2016 met the criteria for reporting discontinued operations.

(3)

All provisions for income tax amounts are current and none are deferred.
Tax Treatment Of Dividends And Distributions

   During the years ended December 31, 2018, 2017 and 2016, the Company’s tax treatment of dividends and distributions were as follows (unaudited):

 

 

 

Year Ended December 31,

 

 

 

2018 (1)

 

 

2017 (2)

 

 

2016

 

Tax treatment of dividends and distributions:

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary dividends

 

$

1.84454

 

 

$

1.22126

 

 

$

0.722

 

Long-term capital gain

 

 

0.21423

 

 

 

0.18959

 

 

 

9.176

 

Unrecaptured section 1250 gain

 

 

0.06498

 

 

 

0.10040

 

 

 

3.117

 

Dividends and distributions per

 

 

 

 

 

 

 

 

 

 

 

 

Common Share/Unit outstanding

 

$

2.12375

 

 

$

1.51125

 

 

$

13.015

 

(1)

The Company’s fourth quarter 2018 dividends and distributions of $0.54 per Common Share/Unit outstanding will be included as taxable income in calendar year 2019.

(2)

The Company’s fourth quarter 2017 dividends and distributions of $0.50375 per Common Share/Unit outstanding will be included as taxable income in calendar year 2018.
Schedule of Disaggregation of Revenue Streams of Rental Income and Percentage of Rental Income

The following table presents the disaggregation of revenue streams of our rental income for the year ended December 31, 2018 (amounts in thousands):

 

 

 

 

Year Ended December 31, 2018

 

 

Revenue Stream

 

Applicable Standard

 

Amount of

Rental Income

 

 

Percentage of

Rental Income

 

 

Leasing revenue

 

Leases

 

$

2,418,168

 

 

 

93.8

%

 

Utility recoveries (“RUBS”)

 

Revenue Recognition

 

 

63,218

 

 

 

2.5

%

 

Parking revenue

 

Revenue Recognition

 

 

26,743

 

 

 

1.0

%

 

Other revenue

 

Revenue Recognition

 

 

69,552

 

 

 

2.7

%

 

Rental income

 

 

 

$

2,577,681

 

 

 

100.0

%