Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

As a REIT, the Company is generally not subject to U.S. federal income tax with respect to that portion of its income which is distributed annually to its stockholders. However, the Company has elected to treat certain of its corporate subsidiaries, including Extra Space Management, Inc., as a TRS. In general, a TRS may perform additional services for tenants and generally may engage in any real estate or non-real estate related business. A TRS is subject to U.S. federal corporate income tax and may be subject to state and local income taxes. The Company accounts for income taxes in accordance with the provisions of ASC 740, “Income Taxes.” Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities. The Company has elected to use the Tax-Law-Ordering approach to determine when excess tax benefits will be realized.

The income tax provision for the years ended December 31, 2021, 2020 and 2019, is comprised of the following components:

	For the Year Ended December 31, 2021
	Federal		State		Total
Current expense	$	21,017	$	3,520	$	24,537
Tax credits/true-up	(4,979)		(138)		(5,117)
Change in deferred expense/(benefit)	818		86		904
Total tax expense	$	16,856	$	3,468	$	20,324

 

	For the Year Ended December 31, 2020
	Federal		State		Total
Current expense	$	15,553	$	3,347	$	18,900
Tax credits/true-up	(5,610)		(135)		(5,745)
Change in deferred expense	594		61		655
Total tax expense	$	10,537	$	3,273	$	13,810

 

	For the Year Ended December 31, 2019
	Federal		State		Total
Current expense	$	10,164	$	2,936	$	13,100
Tax credits/true-up	(3,633)		(30)		(3,663)
Change in deferred benefit	1,787		84		1,871
Total tax expense	$	8,318	$	2,990	$	11,308

A reconciliation of the statutory income tax provisions to the effective income tax provisions for the periods indicated is as follows:

	For the Year Ended December 31,
	2021				2020				2019
Expected tax at statutory rate	$	188,600	21.0	%	$	111,760	21.0	%	$	97,110	21.0	%
Non-taxable REIT income	(166,137)		(18.5)	%	(94,270)		(17.7)	%	(82,717)		(17.9)	%
State and local tax expense - net of federal benefit	3,259		0.4	%	3,075		0.6	%	2,837		0.6	%
Change in valuation allowance	(1,061)		(0.1)	%	(363)		(0.1)	%	(207)		—	%
Tax credits/true-up	(5,117)		(0.6)	%	(5,745)		(1.1)	%	(3,663)		(0.8)	%
Miscellaneous	780		0.1	%	(647)		(0.1)	%	(2,052)		(0.4)	%
Total provision	$	20,324	2.3	%	$	13,810	2.6	%	$	11,308	2.5	%

The major sources of temporary differences stated at their deferred tax effects are as follows:

	December 31, 2021		December 31, 2020
Deferred tax liabilities:
Fixed assets	$	(30,499)	$	(27,374)
Operating and Finance lease right-of-use assets	(6,016)		(2,223)
Other	(61)		(72)
State deferred taxes	(3,842)		(3,210)
Total deferred tax liabilities	(40,418)		(32,879)
Deferred tax assets:
Captive insurance subsidiary	396		378
Accrued liabilities	2,383		2,325
Stock compensation	3,076		2,635
Operating and Finance lease liabilities	7,936		2,232
SmartStop TRS	—		219
Other	916		1,554
State deferred taxes	6,548		6,725
Total deferred tax assets	21,255		16,068
Valuation allowance	(2,241)		(3,302)
Net deferred income tax liabilities	$	(21,404)	$	(20,113)

The state income tax net operating losses expire between 2022 and 2041. The valuation allowance is associated with the state income tax net operating losses. The tax years 2017 through 2020 remain open related to the state returns, and 2018 through 2020 for the federal returns.