Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

10. INCOME TAXES

The Company has elected to be taxed as a REIT under Section 856 of the Code and intends to continue to comply with the provisions of the Code. As a REIT, the Company generally is not subject to federal or state income tax. To maintain its qualification as a REIT, the Company must distribute at least 90% of its REIT taxable income to its stockholders each year and meet certain other tests relating to assets and income. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income tax on its taxable income at regular corporate rates. The Company may also be subject to certain state and local taxes. Under certain circumstances, even though the Company qualifies as a REIT, federal income and excise taxes may be due on its undistributed taxable income. No provision for income taxes has been provided in the accompanying financial statements related to the REIT because the Company has paid or will pay dividends in amounts that exceed at least 90% of its current year taxable income.

Book/tax differences primarily relate to amortization of realized losses on swaps, related party management compensation expense and income on CLOs.

The tax character of the $2.25 of distributions declared to shareholders during 2011 is estimated to be $1.77 as ordinary income, $0.19 as capital gain and $0.29 as return of capital.

The estimated federal tax cost and the tax basis components of distributable earnings were as follows (in thousands):

As of December 31, 2011
Cost of investments	$	9,247,318
Gross appreciation	$	224,625
Gross depreciation		(5,815	)
Net unrealized appreciation (depreciation)	$	218,810
Undistributed ordinary income	$	—
Capital loss carryforwards	$	(13,832	)

As of December 31, 2011, the Company had estimated capital loss carryforwards available to offset future realized gains. Such losses are subject to current and future limitations in accordance with Internal Revenue Code section 382 and expire as follows (in thousands)

December 31, 2012	$	(6,038	)
December 31, 2013		(7,746	)
December 31, 2014		(48	)
	$	(13,832	)

As of December 31, 2011 and 2010, the Company had no undistributed taxable income. Tax years from 2008 through 2011 remain open to examination by U.S. federal, state and local, or non-U.S. tax jurisdictions. No income tax provision was recorded for the Company's open tax years.