Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Components of Deferred tax Liabilities and Assets

Significant components of our deferred tax liabilities and assets are as follows (in thousands):

	December 31,
	2020			2019
Deferred tax liabilities:
Real estate and real estate partnership basis differences	$	(13	)	$	—
Deferred tax assets:
Real estate and real estate partnership basis differences		—			17,316
Tax credit carryforwards		—			53,776
Net operating, capital, and other loss carryforwards		—			6,147
Accruals and expenses		—			6,138
Management contracts and other		—			1,905
Total deferred tax assets		—			85,282
Valuation allowance		—			(4,766	)
Net deferred tax (liabilities) assets	$	(13	)	$	80,516

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending balance of our unrecognized tax benefits is presented below (in thousands):

	2020			2019			2018
Balance at January 1	$	5,080		$	2,618		$	2,476
Additions based on tax position taken in current year (1)		(4,625	)		2,758			—
Additions based on tax positions related to prior years		(218	)		226			142
Reductions as a result of a lapse of the applicable statutes		4,203			(522	)		—
Balance at December 31	$	4,440		$	5,080		$	2,618

(1)	Reduction in unrecognized tax benefit for the year ended December 31, 2020, is related to tax positions taken as a result of the Separation.

Components of Income Tax Benefit or Expense

Significant components of the income tax benefit or expense are as follows and are classified within income tax benefit in our consolidated statements of operations for the years ended December 31, 2020, 2019, and 2018 (in thousands):

	2020			2019			2018
Current:
Federal	$	6,271		$	5,204		$	11,269
State		8,637			8,558			10,218
Total current		14,908			13,762			21,487
Deferred:
Federal		(7,691	)		(8,575	)		(29,243	)
State		(2,694	)		(4,882	)		(5,590	)
Revaluation of deferred taxes due to change in tax rate		90,914			—			—
Total deferred		80,529			(13,457	)		(34,833	)
Total expense (benefit)	$	95,437		$	305		$	(13,346	)

Reconciliation of Income Tax Attributable to Operations

The reconciliation of income tax attributable to continuing operations computed at the United States statutory rate to income tax benefit is shown below (dollars in thousands):

	2020						2019						2018
	Amount			Percent			Amount			Percent			Amount			Percent
Tax (benefit) provision at United States statutory rates on consolidated income or loss from continuing operations subject to tax	$	(3,516	)		21.0	%	$	(2,836	)		21.0	%	$	33,296			21.0	%
State income tax expense, net of federal tax (benefit) expense		(1,964	)		11.7	%		3,935			(29.1	%)		11,933			7.7	%
Effect of permanent differences		434			(2.6	%)		(139	)		1.0	%		302			0.2	%
Tax effect of intercompany transactions (1)		—			—	%		—			—	%		(33,250	)		(21.0	%)
Tax credits		(296	)		1.8	%		(667	)		4.9	%		(6,897	)		(4.4	%)
Tax reform revaluation		—			—	%		—			—	%		288			0.2	%
Decrease in valuation allowance		—			—	%		(164	)		1.2	%		(20,434	)		(12.9	%)
Separation		7,596			(45.4	%)		—			—	%		—			—	%
TRS REIT election (2)		90,914			(543.1	%)		—			—	%		—			—	%
Other		2,269			(13.6	%)		176			(1.3	%)		1,416			0.9	%
Total income tax expense (benefit)	$	95,437			(570.2	%)	$	305			(2.3	%)	$	(13,346	)		(8.3	%)

(1)

Effective January 1, 2017, we adopted a new accounting standard applicable to intercompany asset transfers. 2018 includes the tax benefit to establish the initial deferred tax asset from the intercompany transfer of a portion of the Asset Management business between the AIR Operating Partnership and TRS entities.

(2)	Consistent with our simplified business structure and strategy, we have elected to treat one of our taxable subsidiaries as a REIT, resulting in the non-cash removal of deferred tax asset balances for the year ended December 31, 2020.

Schedule of Dividends Per Share Held

For the years ended December 31, 2020, 2019, and 2018, dividends per share held for the entire year were estimated to have the following tax attributes:

	2020					2019					2018
(unaudited)	Amount		Percentage			Amount		Percentage			Amount		Percentage
Ordinary income	$	2.41		6.0	%	$	0.66		20.7	%	$	0.51		33.4	%
Capital gains		15.00		37.4	%		1.29		40.4	%		0.93		61.2	%
Qualified dividends		0.48		1.2	%		0.66		20.7	%		—		—	%
Unrecaptured Section 1250 gain		6.74		16.8	%		0.58		18.2	%		0.08		5.4	%
Return of capital		15.49		38.6	%		—		—	%		—		—	%
Total	$	40.12		100.0	%	$	3.19		100.0	%	$	1.52		100.0	%