(3) Discontinued Operations

As discussed in Note 2, railcar assets of $284.5 million and $449.7 million were reclassified as held for sale as of December 31, 2019 and 2018, respectively, and the related operations of the rail business were reclassified as discontinued operations in the accompanying consolidated statements of income and cash flows.

The Company’s held for sale railcar assets as of the dates indicated are made up as follows (in thousands):


	December 31,		December 31,
	2019		2018
Rental equipment	$	315,059	$	448,466
Other assets		2,409		1,264
Loss on classification as held for sale		(7,323)		-
Impairment of rental equipment		(25,632)		-
Assets held for sale	$	284,513	$	449,730

Other assets and liabilities of the rail business, including accounts receivable, accrued expenses and other liabilities, deferred tax liabilities and debt, have not been classified as held for sale in the consolidated balance sheets as of December 31, 2019 and 2018 as they will not be sold by the Company. The rail debt will be repaid upon the sale of the railcar assets.

During the year ended December 31, 2019, the Company recorded an impairment charge of $33.0 million to reduce the book value of its railcar portfolio to its estimated fair value less costs to sell. To assist the Company in its assessment of fair value, a third-party desk top appraisal was carried out on the railcar fleet using a combination of cost and market approaches. The cost approach utilizes the current replacement cost for a particular car type and calculates an estimated depreciation based on a railcar having a 40-year life and residual value being 10% of the estimated purchase price. The market approach estimates value based on recent market transactions involving similar railcars. The railcars were classified within Level 3 of the fair value hierarchy.

The following table summarizes the components of net loss from discontinued operations in the accompanying consolidated statements of income for the years ended December 31, 2019, 2018 and 2017 (in thousands):


	Year Ended December 31,
	2019		2018		2017
Revenue
Rail lease revenue	$	26,130	$	35,703	$	32,476

Operating expenses
Depreciation of rental equipment		5,248		14,189		11,199
Storage, handling and other expenses		6,782		5,692		5,615
Gain on sale of rental equipment		(9,490)		(1,839)		(14)
Administrative expenses		3,680		4,065		3,111
Total operating expenses		6,220		22,107		19,911

Operating income		19,910		13,596		12,565

Interest expense		13,343		15,772		11,237
Income (loss) before income taxes		6,567		(2,176)		1,328

Loss on classification as held for sale and subsequent impairment		32,955		-		-
(Loss) income from discontinued operations before income taxes		(26,388)		(2,176)		1,328
Income tax benefit		(6,378)		(1,667)		(8,167)
Net (loss) income from discontinued operations	$	(20,010)	$	(509)	$	9,495