| INCOME TAXES |
INCOME TAXES
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting and tax purposes. Components of the Company's deferred tax assets and liabilities as of September 30, 2019 and December 31, 2018, are as follows:
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Deferred Tax Assets and Liabilities |
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September 30, 2019 |
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December 31, 2018 |
Deferred Tax Assets: |
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Deferred contract revenue |
$ |
1,475,925 |
|
|
$ |
1,691,899 |
|
Net operating loss carryforwards |
5,019,001 |
|
|
5,424,671 |
|
Loan loss provision |
— |
|
|
263,508 |
|
Basis reduction of investment in partnerships |
250,359 |
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|
— |
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Other |
968,429 |
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|
95,695 |
|
Sub-total |
$ |
7,713,714 |
|
|
$ |
7,475,773 |
|
Deferred Tax Liabilities: |
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Cost recovery of leased and fixed assets |
$ |
(2,799,360 |
) |
|
$ |
(2,508,547 |
) |
Other |
(31,005 |
) |
|
(19,023 |
) |
Sub-total |
$ |
(2,830,365 |
) |
|
$ |
(2,527,570 |
) |
Total net deferred tax asset |
$ |
4,883,349 |
|
|
$ |
4,948,203 |
|
As of September 30, 2019, the total deferred tax assets and liabilities presented above relate to the Company's TRSs. The Company recognizes the tax benefits of uncertain tax positions only when the position is "more likely than not" to be sustained upon examination by the tax authorities based on the technical merits of the tax position. The Company's policy is to record interest and penalties on uncertain tax positions as part of tax expense. Tax years subsequent to the year ended December 31, 2015 remain open to examination by federal and state tax authorities.
Total income tax expense (benefit) differs from the amount computed by applying the federal statutory income tax rate of 21 percent for the three and nine months ended September 30, 2019 and 2018 to income from operations and other income and expense for the periods presented, as follows:
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Income Tax Expense (Benefit) |
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For the Three Months Ended |
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For the Nine Months Ended |
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September 30, 2019 |
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September 30, 2018 |
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September 30, 2019 |
|
September 30, 2018 |
Application of statutory income tax rate |
$ |
(4,097,584 |
) |
|
$ |
1,459,638 |
|
|
$ |
(1,115,290 |
) |
|
$ |
4,496,003 |
|
State income taxes, net of federal tax expense (benefit) |
(19,632 |
) |
|
(146,677 |
) |
|
503,932 |
|
|
(411,696 |
) |
Federal Tax Attributable to Income of Real Estate Investment Trust |
3,984,180 |
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|
(2,057,531 |
) |
|
1,044,600 |
|
|
(5,876,965 |
) |
Other |
40,330 |
|
|
(2,097 |
) |
|
(15,914 |
) |
|
(13,684 |
) |
Total income tax expense (benefit) |
$ |
(92,706 |
) |
|
$ |
(746,667 |
) |
|
$ |
417,328 |
|
|
$ |
(1,806,342 |
) |
The components of income tax expense (benefit) include the following for the periods presented:
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Components of Income Tax Expense (Benefit) |
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For the Three Months Ended |
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For the Nine Months Ended |
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September 30, 2019 |
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September 30, 2018 |
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September 30, 2019 |
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September 30, 2018 |
Current tax expense (benefit) |
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Federal |
$ |
— |
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|
$ |
(6,643 |
) |
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$ |
216,093 |
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$ |
(43,319 |
) |
State (net of federal tax expense (benefit)) |
(1,270 |
) |
|
(1,750 |
) |
|
136,381 |
|
|
(11,408 |
) |
Total current tax expense (benefit) |
$ |
(1,270 |
) |
|
$ |
(8,393 |
) |
|
$ |
352,474 |
|
|
$ |
(54,727 |
) |
Deferred tax expense (benefit) |
|
|
|
|
|
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Federal |
$ |
(73,074 |
) |
|
$ |
(593,347 |
) |
|
$ |
(302,697 |
) |
|
$ |
(1,351,327 |
) |
State (net of federal tax expense (benefit)) |
(18,362 |
) |
|
(144,927 |
) |
|
367,551 |
|
|
(400,288 |
) |
Total deferred tax expense (benefit) |
$ |
(91,436 |
) |
|
$ |
(738,274 |
) |
|
$ |
64,854 |
|
|
$ |
(1,751,615 |
) |
Total income tax expense (benefit), net |
$ |
(92,706 |
) |
|
$ |
(746,667 |
) |
|
$ |
417,328 |
|
|
$ |
(1,806,342 |
) |
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