Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

5. Income Taxes

In connection with the election to be taxable as a REIT for the taxable year ended December 31, 2021 (see Note 1), the Company reassessed its deferred tax assets and deferred tax liabilities during the fourth quarter of its previous fiscal year ended November 30, 2020, which resulted in de-recognizing all of its deferred tax assets and deferred tax liabilities. This de-recognition occurred because the expected recovery or settlement of the related assets and liabilities would not result in deductible or taxable amounts in any taxable year in which INDUS qualifies as a REIT. As a result of the de-recognition valuation, INDUS recorded an income tax expense for the year ended December 31, 2020 of $4,005. Accordingly, the only income tax provision reflected in the Company’s results of operations for 2021 is related to its TRS. There was no income tax expense in the Transition Period.

The income tax provision for 2021 and 2020 is summarized as follows:

	2021		2020
Current federal	$	(22)	$	—
Current state and local		(4)		—
Deferred federal		—		(1,966)
Deferred state and local		—		(1,186)
Total income tax provision	$	(26)	$	(3,152)

The differences between the income tax provision at the U.S. statutory income tax rate and the actual income tax provision for 2021 and 2020 are as follows:

	2021		2020
Tax (provision) benefit at statutory rate	$	(22)	$	1,955
Deferred tax adjustment due to REIT election		-		(4,005)
State and local taxes, including valuation allowance, net of federal tax effect		(4)		115
Permanent items		-		(1,257)
Other		-		40
Total income tax provision	$	(26)	$	(3,152)

INDUS evaluated each tax position taken in its tax returns and recognized a liability for any tax position deemed less likely than not to be sustained under examination by the relevant taxing authorities. The Company believes that its income tax filing positions will be sustained on examination and does not anticipate any adjustments that would result in a material change on its financial statements. As a result, no accrual for uncertain income tax positions has been recorded pursuant to ASC 740.

Federal income tax returns for the Transition Period, fiscal year ended November 30, 2020 and fiscal year ended November 30, 2019 are open to examination by the Internal Revenue Service.