Note 14 -Income Taxes

The following table reconciles our GAAP net income to estimated REIT taxable income for the quarters ended March 31, 2016, March 31, 2015.



	For the Quarter Ended
	March 31, 2016			March 31, 2015
GAAP net loss	$	(279,475	)	$	(125,469	)
Book to tax differences:
Net book to tax differences on Non-Agency Securities	(4,125		)	—
Changes in interest rate contracts	315,811			167,407
Gains on Security Sales	(1,891		)	(6,544		)
Amortization of deferred hedging costs	(9,232		)	(1,877		)
Other	3			4
Estimated REIT taxable income	$	21,091		$	33,521

Interest rate contracts are treated as hedging transactions for tax purposes. Unrealized gains and losses on open interest rate contracts are not included in the determination of taxable income. Realized gains and losses on interest rate contracts terminated before their maturity are deferred and amortized over the remainder of the original term of the contract.

Net capital losses realized in 2013, 2014 and 2015 totaling $(579,322), $(341,850) and $(5,175) will be available to offset future capital gains realized through 2018, 2019 and 2020, respectively.

The aggregate tax basis of our assets and liabilities was greater than our total Stockholders’ Equity at March 31, 2016 by approximately $333,763, or approximately $9.10 per common share (based on the 36,692 common shares then outstanding).

We are required and intend to timely distribute substantially all of our REIT taxable income in order to maintain our REIT status under the Code. Total dividend payments to stockholders were $40,298 and $46,391 for the quarters ended March 31, 2016 and March 31, 2015, respectively. Our estimated REIT taxable income available to pay dividends was $21,091 and $33,521 for the quarters ended March 31, 2016 and March 31, 2015, respectively. Our taxable REIT income and dividend requirements to maintain our REIT status are determined on an annual basis. Dividends paid in excess of taxable REIT income for the year (including amounts carried forward from prior years) will generally not be taxable to common stockholders.

Our management is responsible for determining whether tax positions taken by us are more likely than not to be sustained on their merits. We have no material unrecognized tax benefits or material uncertain tax positions.