Income Taxes

2 Months Ended

Feb. 29, 2020

Income taxes have been provided for based upon the tax laws and rates in countries in which our operations are conducted and income is earned. The Company received an assurance from the Bermuda Minister of Finance that it would be exempted from local income, withholding and capital gains taxes until March 2035. Consequently, the provision for income taxes relates to income earned by certain subsidiaries of the Company which are located in, or earn income in, jurisdictions that impose income taxes, primarily the United States and Ireland.

The sources of income from continuing operations before income taxes and earnings of our unconsolidated equity method investments for the two months ended February 29, 2020 and February 28, 2019 were as follows:


	Two Months Ended February 29/28,
		2020		2019
U.S. operations		$	3,084	$	1,229
Non-U.S. operations		1,754		15,424
Income from continuing operations before income taxes and earnings of unconsolidated equity method investments		$	4,838	$	16,653

Our aircraft-owning subsidiaries that are recognized as corporations for U.S. tax purposes are primarily non-U.S. corporations. These subsidiaries generally earn income from sources outside the United States and typically are not subject to U.S. federal, state or local income taxes. The aircraft owning subsidiaries resident in Ireland, Mauritius and the U.S. are subject to tax in those respective jurisdictions.

We have a U.S.-based subsidiary which provides management services to our subsidiaries and is subject to U.S. federal, state and local income taxes. We also have Ireland and Singapore based subsidiaries which provide management services to our non-U.S. subsidiaries and are subject to tax in those respective jurisdictions.

Differences between statutory income tax rates and our effective income tax rates applied to pre-tax income from continuing operations consisted of the following:


	Two Months Ended February 29/28,
		2020		2019
Notional U.S. federal income tax expense at the statutory rate		$	1,016	$	3,497
U.S. state and local income tax, net		390		229
Non-U.S. operations:
Bermuda		(1,845)		(4,020)
Ireland		(1,147)		2,382
Singapore		(6)		(5)
Other low tax jurisdictions		2,533		(739)
Non-deductible expenses in the U.S.		734		555
Other		—		(1,147)

Income tax provision		$	1,675	$	752

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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