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Income Taxes
9 Months Ended
Sep. 30, 2012
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

We elected to be taxed as a REIT under the Internal Revenue Code (the "Code"), commencing with our taxable year ended December 31, 1995. It is our intention to adhere to the organizational and operational requirements to maintain our REIT status. As a REIT, we generally will not be subject to corporate level federal income tax, provided that distributions to our stockholders equal at least the amount of our REIT taxable income as defined under the Code. We are required to pay U.S. federal and state income taxes on our net taxable income, if any, from the activities conducted by our taxable REIT subsidiaries (“TRSs”). Accordingly, the only provision for federal income taxes in our condensed consolidated financial statements relates to our consolidated TRSs.
We recorded an income tax (expense) benefit from continuing operations during the three months ended September 30, 2012 and 2011 of approximately $(478,000) and $3.2 million, respectively, and for the nine months ended September 30, 2012 and 2011 of approximately $(417,000) and $3.5 million, respectively. The tax expenses are primarily attributable to the reversal of the deferred tax assets associated with state net operating loss carry forwards that are not expected to be utilized in the future by DIM, and by taxable income generated by IRT Capital Corporation II (“IRT”). The 2011 tax benefits are primarily attributable to the net operating losses generated by DIM and IRT. We recorded an income tax benefit from discontinued operations of approximately $33.6 million and $34.5 million during the three and nine months ended September 30, 2011. There was no income tax benefit or expense from discontinued operations recorded during the three and nine months ended September 30, 2012. The tax benefits recorded related to discontinued operations for the three and nine months ended September 30, 2011 were primarily attributable to the reversal of a deferred tax liability associated with properties held for sale by DIM and IRT and, to a lesser extent, by net operating losses. Although DIM is organized under the laws of the Netherlands, it pays U.S. corporate income tax based on its operations in the United States. Pursuant to the tax treaty between the U.S. and the Netherlands, DIM is entitled to the avoidance of double taxation on its U.S. income. Thus, it pays virtually no taxes in the Netherlands. As of September 30, 2012, DIM had federal and state net operating loss carry forwards of approximately $6.5 million and $5.7 million, respectively. These carry forwards begin to expire in 2027.
Further, we believe that we have appropriate support for the tax positions taken on our tax returns and that our accruals for the tax liabilities are adequate for all years still subject to tax audit after 2007.