Income Taxes

12 Months Ended

Dec. 31, 2019

Piedmont’s income tax basis net income for the years ended December 31, 2019, 2018, and 2017, is calculated as follows (in thousands):


	2019		2018		2017
GAAP basis financial statement net income	$	229,261	$	130,296	$	133,564
Increase/(decrease) in net income resulting from:
Depreciation and amortization expense recognized for financial reporting purposes in excess of amounts recognized for income tax purposes	10,381		54,420		62,916
Rental income accrued for income tax purposes less than amounts for financial reporting purposes	(34,804)		(9,681)		(25,432)
Net amortization of above/below-market lease intangibles for income tax purposes in excess of amounts for financial reporting purposes	(7,698)		(7,453)		(6,041)
Gain on disposal of property for financial reporting purposes less than/(in excess of) amounts for income tax purposes	(85,463)		(36,241)		10,068
Taxable income or loss of Piedmont Washington Properties, Inc., in excess of/(less than) amount for financial reporting purposes	411		(2,089)		176
Other expenses, including impairment loss on real estate assets, for financial reporting purposes in excess of/ (less than) amounts for income tax purposes	23,127		(37,394)		49,859
Taxable income for POH in excess of/(less than) amount for financial reporting purposes	175		(64)		(28)
Income tax basis net income, prior to dividends paid deduction	$	135,390	$	91,794	$	225,082

For income tax purposes, dividends to common stockholders are characterized as ordinary income, capital gains, or as a return of a stockholder’s invested capital. The composition of Piedmont’s distributions per common share is presented below:


	2019		2018		2017
Ordinary income	29.82	%	100.00	%	53.61	%
Return of capital	—	%	—	%	—	%
Capital gains	70.18	%	—	%	46.39	%
	100	%	100	%	100	%

As of December 31, 2019 and 2018, the tax basis carrying value of Piedmont’s total assets was approximately $3.3 billion and $3.6 billion, respectively.

Approximately $1.0 million and $2.4 million of accrued interest and penalties related to uncertain tax positions was included in accounts payable, accrued expenses, and accrued capital expenditures in the accompanying consolidated balance sheets as of December 31, 2019 and 2018, respectively. Piedmont recognized approximately $1.4 million of recoveries of previously recorded estimated accrued interest and penalties for both of the years ended December 31, 2019 and 2018, and $0.1 million of recoveries for the year ended December 31, 2017, related to such positions. The tax years 2016 to 2018 remain open to examination by various federal and state taxing authorities.