Income Taxes

The components of the income tax provision for the years ended December 31, 2016, 2015 and 2014 are comprised of the following:



	Year Ended December 31,
	2016			2015			2014
Current:
Federal	$	(656	)	$	68		$	(51	)
State	(251		)	(297		)	(196		)
Deferred:
State	(182		)	112			9
	$	(1,089	)	$	(117	)	$	(238	)

Deferred income taxes represent the tax effect of the temporary differences between the book and tax basis of assets and liabilities. Deferred income tax assets and liabilities include the following as of December 31, 2016 and 2015:



	Year Ended December 31,
	2016			2015
Impairment of Real Estate	$	2,051		$	2,484
Other - Temporary Differences	433			1,021
Valuation Allowance	(2,181		)	(3,437		)
Total Deferred Income Tax Assets, Net of Allowance	$	303		$	68
Straight-line Rent	$	(51	)	$	(79	)
Basis Difference - Real Estate Properties	(260		)	—
Other - Temporary Differences	(186		)	(1		)
Total Deferred Income Tax Liabilities	$	(497	)	$	(80	)
Total Net Deferred Income Tax Liabilities	$	(194	)	$	(12	)

A valuation allowance is recorded if we believe it is more likely than not that all or some portion of our deferred income tax assets will not be realized. We do not have projections of future taxable income or other sources of taxable income in the TRSs significant enough to allow us to believe it is more likely than not that we will realize our deferred income tax assets. Therefore, we have recorded a valuation allowance against our deferred income tax assets. An increase or decrease in the valuation allowance that results from a change in circumstances, and which causes a change in our judgment about the realizability of the related deferred income tax assets, is included in the current income tax provision.

The income tax provision pertaining to income from continuing operations of the TRSs differs from the amounts computed by applying the applicable federal statutory rate as follows for the years ended December 31, 2016, 2015 and 2014:



	Year Ended December 31,
	2016			2015			2014
Tax (Provision) Benefit at Federal Rate Related to Continuing Operations	$	(1,764	)	$	64		$	(532	)
State Tax Provision, Net of Federal Benefit	(462		)	(212		)	(214		)
Non-deductible Permanent Items, Net	7			10			1
Change in Valuation Allowance	1,256			787			1,133
Other	(126		)	(766		)	(626		)
Net Income Tax Provision	$	(1,089	)	$	(117	)	$	(238	)

We evaluate tax positions taken in the financial statements on a quarterly basis under the interpretation for accounting for uncertainty in income taxes. As a result of this evaluation, we may recognize a tax benefit from an uncertain tax position only if it is "more-likely-than-not" that the tax position will be sustained on examination by taxing authorities. As of December 31, 2016, we do not have any unrecognized tax benefits.

We file income tax returns in the U.S. and various states. The statute of limitations for income tax returns is generally three years. As such, our tax returns that are subject to examination would be primarily from 2013 and thereafter.

Federal Income Tax Treatment of Common Dividends

For income tax purposes, dividends paid to the Company's common shareholders are characterized as ordinary income, capital gains or as a return of a shareholder's invested capital. For the years ended December 31, 2016, 2015 and 2014, the dividends per common share were characterized as follows:



	2016		As a Percentage of Distributions		2015		As a Percentage of Distributions		2014		As a Percentage of Distributions
Ordinary Income	$	0.6935	82.53	%	$	0.2629	67.93	%	$	0.4412	100.00	%
Unrecaptured Section 1250 Gain	0.1130		13.45	%	0.1241		32.07	%	—		0.00	%
Capital Gain	0.0066		0.78	%	—		0.00	%	—		0.00	%
Nondividend Distribution - Return of Capital	0.0272		3.24	%	—		0.00	%	—		0.00	%
	$	0.8403	100.00	%	$	0.3870	100.00	%	$	0.4412	100.00	%

The income tax characterization of dividends to common shareholders is based on the calculation of Taxable Earnings and Profits, as defined in the Code. Taxable Earnings and Profits differ from regular taxable income due primarily to differences in the estimated useful lives and methods used to compute depreciation and in the recognition of gains and losses on the sale of real estate assets.