Quarterly report pursuant to Section 13 or 15(d)


3 Months Ended
Mar. 31, 2022
Income Tax Disclosure [Abstract]  
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 March 31, 2022 and December 31, 2021, are as follows:
Deferred Tax Assets and Liabilities
March 31, 2022 December 31, 2021
Deferred Tax Assets:
Deferred contract revenue $ 1,298,150  $ 1,333,510 
Net operating loss carryforwards 6,853,050  6,929,821 
Capital loss carryforward 92,418  92,418 
Other 367  366 
Sub-total $ 8,243,985  $ 8,356,115 
Valuation allowance (3,690,371) (3,891,342)
Sub-total $ 4,553,614  $ 4,464,773 
Deferred Tax Liabilities:
Cost recovery of leased and fixed assets $ (4,344,242) $ (4,187,621)
Other (75,300) (70,867)
Sub-total $ (4,419,542) $ (4,258,488)
Total net deferred tax asset $ 134,072  $ 206,285 
As of March 31, 2022, the total deferred tax assets and liabilities presented above relate to the Company's taxable REIT subsidiaries ("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. As of March 31, 2022, the Company had no uncertain tax positions. Tax years beginning with the year ended December 31, 2018 remain open to examination by federal and state tax authorities.
As of March 31, 2022 and December 31, 2021, the TRSs had cumulative net operating loss carryforwards ("NOL") of $28.5 million and $28.7 million, respectively. As of March 31, 2022 and December 31, 2021, net operating losses of $25.4 million and $25.5 million, respectively, that were generated during the years ended December 31, 2021, 2020, 2019, and 2018 may be carried forward indefinitely, subject to limitation. Net operating losses generated for years prior to December 31, 2018 may be carried forward for 20 years.
Management assessed the available evidence and determined that it is more likely than not that the capital loss carryforward will not be utilized prior to expiration. Due to the uncertainty of realizing this deferred tax asset, a valuation allowance for Corridor Private of $92 thousand was recorded equal to the amount of the tax benefit of this carryforward at both March 31, 2022 and December 31, 2021, respectively and $3.6 million and $3.8 million valuation allowance for Corridor MoGas at March 31, 2022 and December 31, 2021, respectively. In the future, if the Company concludes, based on existence of sufficient evidence, that it should realize more or less of its deferred tax assets, the valuation allowance will be adjusted accordingly in the period such conclusion is made.
The Company provides for income taxes during interim periods based on the estimated effective tax rate for the year and any discrete adjustments. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the taxable REIT subsidiaries, tax law changes, and future business acquisitions or divestitures. The taxable subsidiaries’ effective tax rates were 13.6 percent and 65.3 percent for the three months ended March 31, 2022 and 2021, respectively.
The components of income tax expense (benefit) include the following for the periods presented:
Components of Income Tax Expense (Benefit)
For the Three Months Ended
March 31, 2022 March 31, 2021
Current tax expense
Federal $ 105,568  $ 22,740 
State (net of federal tax expense (benefit)) 45,476  5,127 
Total current tax expense $ 151,044  $ 27,867 
Deferred tax expense (benefit)
Federal $ 59,424  $ (22,083)
State (net of federal tax expense (benefit)) 12,789  (4,317)
Total deferred tax expense (benefit) $ 72,213  $ (26,400)
Total income tax expense, net $ 223,257  $ 1,467