Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

Income Taxes

10. Income Taxes

The significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands):

	December 31,
	2023		2022
Deferred Tax Assets:
Net operating loss carryforward	$	22,805	$	22,383
Other reserves		1,095		561
State taxes and other		1,657		3,926
Depreciation		1,853		720
Total gross deferred tax assets		27,410		27,590
Deferred Tax Liabilities:
Amortization		(34)		(25)
Deferred revenue		(22)		—
Other		(167)		(47)
Total gross deferred tax liabilities		(223)		(72)
Less: valuation allowance		(27,187)		(27,518)
Deferred tax assets, net	$	—	$	—

At December 31, 2023 and 2022, the net operating loss carryforwards for federal income tax purposes totaled approximately $103.8 million and $101.9 million, respectively. These losses, which begin to expire in 2031, are available to offset future income through 2043.

The Company’s income tax provision, net was included in the consolidated statements of operations as follows (in thousands):

	2023		2022		2021
Current:
Federal	$	(14)	$	—	$	—
State		(4,548)		(359)		(109)
Current income tax provision, net		(4,562)		(359)		(109)
Deferred:
Federal		(123)		2,568		1,262
State		(208)		654		(963)
Change in valuation allowance		331		(3,222)		(299)
Deferred income tax provision, net		—		—		—
Income tax provision, net	$	(4,562)	$	(359)	$	(109)

The differences between the income tax (provision) benefit calculated at the statutory U.S. federal income tax rate of 21% and the actual income tax provision, net were as follows (in thousands):

	2023		2022		2021
Expected federal tax expense at statutory rate	$	(45,033)	$	(18,406)	$	(7,226)
Tax impact of REIT election		40,767		20,981		8,823
Expected tax (provision) benefit of TRS		(4,266)		2,575		1,597
State income tax benefit, net of federal (provision)		(164)		517		(760)
Change in valuation allowance		331		(3,222)		(299)
Other permanent items		(463)		(729)		(647)
Tax refunds and credits		—		500		—
Income tax provision, net	$	(4,562)	$	(359)	$	(109)

The Company’s tax years from 2020 to 2023 will remain open to examination by the federal and state authorities for three and four years, respectively.

Characterization of Distributions

For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof. Distributions paid per share were characterized as follows (unaudited):

	2023				2022				2021
	Amount		%		Amount		%		Amount		%
Common Stock:
Ordinary income (1)	$	—	—	%	$	0.100	100	%	$	—	—	%
Capital gain		0.300	100			—	—			—	—
Return of capital		—	—			—	—			—	—
Total	$	0.300	100	%	$	0.100	100	%	$	—	—	%
Preferred Stock — Series E
Ordinary income (1)	$	—	—	%	$	—	—	%	$	0.772	100	%
Capital gain		—	—			—	—			—	—
Return of capital		—	—			—	—			—	—
Total	$	—	—	%	$	—	—	%	$	0.772	100	%
Preferred Stock — Series F
Ordinary income (1)	$	—	—	%	$	—	—	%	$	0.990	100	%
Capital gain		—	—			—	—			—	—
Return of capital		—	—			—	—			—	—
Total	$	—	—	%	$	—	—	%	$	0.990	100	%
Preferred Stock — Series G
Ordinary income (1)	$	—	—	%	$	0.567	100	%	$	0.234	100	%
Capital gain		0.469	100			—	—			—	—
Return of capital		—	—			—	—			—	—
Total	$	0.469	100	%	$	0.567	100	%	$	0.234	100	%
Preferred Stock — Series H
Ordinary income (1)	$	—	—	%	$	1.531	100	%	$	0.923	100	%
Capital gain		1.531	100			—	—			—	—
Return of capital		—	—			—	—			—	—
Total	$	1.531	100	%	$	1.531	100	%	$	0.923	100	%
Preferred Stock — Series I
Ordinary income (1)	$	—	—	%	$	1.425	100	%	$	0.653	100	%
Capital gain		1.425	100			—	—			—	—
Return of capital		—	—			—	—			—	—
Total	$	1.425	100	%	$	1.425	100	%	$	0.653	100	%

(1) Ordinary income qualifies for Section 199A treatment per the 2017 Tax Cuts and Jobs Act.