Income Taxes

The following table summarizes the tax status of dividends paid on our common shares:



	Year ended December 31,
	2014		2013	2012
Dividend per share	$	1.88	1.85	1.85
Ordinary income	70%		70%	71%
Capital gain	16%		6%	1%
Return of capital	14%		—%	28%
Qualified dividend income	—%		24%	—%

RRG is subject to federal and state income taxes and files separate tax returns. Income tax expense consists of the following (in thousands):



	Year ended December 31,
	2014			2013	2012
Income tax expense (benefit):
Current	$	1,152	⁽¹⁾	—	97
Deferred	—			—	13,727
Total income tax expense (benefit)	$	1,152		—	13,824
⁽¹⁾ Includes $2.2 million of tax expense presented with Gain on sale of real estate, net of tax on the Consolidated Statements of Operations.

Income tax expense (benefit) is included in the Consolidated Statements of Operations as either income tax expense (benefit) of taxable REIT subsidiaries, if the related income is from continuing operations, or is presented net of gains on sale of real estate, if the taxable income is from the gain on sale. Income tax expense (benefit) is included in discontinued operations, net of gains on sale of real estate, if the taxable income is from the gain on sale that qualified as discontinued operations, as follows (in thousands):



	Year ended December 31,
	2014			2013	2012
Income tax expense (benefit) from:
Continuing operations	$	1,152	⁽¹⁾	—	13,224
Discontinued operations	—			—	600
Total income tax expense (benefit)	$	1,152		—	13,824
⁽¹⁾ Includes $2.2 million of tax expense presented with Gain on sale of real estate, net of tax on the Consolidated Statements of Operations.

Income tax expense (benefit) differed from the amounts computed by applying the U.S. Federal income tax rate of 34% to pretax income of RRG as follows (in thousands):



	Year ended December 31,
	2014				2013		2012
Computed expected tax expense (benefit)	$	5,140			1,677		(2,099	)
Increase (decrease) in income tax resulting from state taxes	(629		)		98		(122	)
Valuation allowance	(3,301		)		(1,511	)	15,635
All other items	(58		)		(264	)	410
Total income tax expense	1,152				—		13,824
Amounts attributable to discontinued operations	—				—		600
Amounts attributable to continuing operations	$	1,152		⁽¹⁾	—		13,224
⁽¹⁾ Includes $2.2 million of tax expense presented with Gain on sale of real estate, net of tax on the Consolidated Statements of Operations.

The following table represents the Company's net deferred tax assets recorded in accounts payable and other liabilities in the accompanying Consolidated Balance Sheets (in thousands):



	December 31,
	2014			2013
Deferred tax assets
Investments in real estate partnerships	$	8,427		8,314
Provision for impairment	3,299			3,273
Deferred interest expense	2,538			4,295
Capitalized costs under Section 263A	1,832			2,184
Net operating loss carryforward	—			2,019
Employee benefits	385			488
Other	1,370			887
Deferred tax assets	17,851			21,460
Valuation allowance	(17,302		)	(20,603	)
Deferred tax assets, net	549			857
Deferred tax liabilities
Straight line rent	549			537
Depreciation	—			320
Deferred tax liabilities	549			857
Net deferred tax assets	$	—		—

During the years ended December 31, 2014 and 2013, the net change in the total valuation allowance was $3.3 million and $1.5 million, respectfully.

The evaluation of the recoverability of the deferred tax assets and the need for a valuation allowance requires the Company to weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets will not be realized. The Company's framework for assessing the recoverability of deferred tax assets includes weighing recent taxable income (loss), projected future taxable income (loss) of the character necessary to realize the deferred tax assets, the carryforward periods for the net operating loss, including the effect of reversing taxable temporary differences, and prudent feasible tax planning strategies that would be implemented, if necessary, to protect against the loss of deferred tax assets. As of December 31, 2014, the projected future taxable income and unpredictable nature of potential property sales with built in losses within the TRS caused the Company to determine that it is still more likely than not that the net deferred tax assets will not be realized. As a result, the deferred tax asset continues to be fully reserved.

The Company accounts for uncertainties in income tax law in accordance with FASB ASC Topic 740, under which tax positions shall initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open tax years based on an assessment of many factors including past experience and interpretations of tax laws applied to the facts of each matter. Federal and state tax returns are open from 2011 and forward for the Company.