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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
    As a REIT, the Company is not subject to federal income tax to the extent that it makes qualifying distributions to its stockholders and satisfies on a continuing basis, through actual investment and operating results, the REIT requirements including certain asset, income and stock ownership tests.
    Based on the Company's analysis of any potential uncertain income tax positions, the Company concluded that it does not have any uncertain tax positions that meet the recognition or measurement criteria as of December 31, 2021. The Company files U.S. federal and state income tax returns. As of December 31, 2021, U.S. federal tax returns filed by the Company for 2020, 2019 and 2018 and state tax returns filed for 2020, 2019, 2018, 2017 and 2016 are open for examination pursuant to relevant statutes of limitation. In the event that the Company incurs income tax related interest and penalties, the Company's policy is to classify them as a component of its provision for income taxes.
Income Tax Provision
    Subject to the limitation under the REIT asset test rules, the Company is permitted to own up to 100% of the stock of one or more TRS. Currently, the Company owns one TRS that is taxable as a corporation and is subject to federal, state and local income tax on its net income at the applicable corporate rates. The TRS, which was formed in Delaware on July 28, 2014, is a limited liability company and a wholly-owned subsidiary of the Company. For the years ended December 31, 2021, December 31, 2020 and December 31, 2019, the Company recorded a federal and state tax provision of approximately $99 thousand, $396 thousand, and $1.1 million, respectively.
    The following table summarizes the Company's income tax provision for the years ended December 31, 2021, December 31, 2020 and December 31, 2019 (dollars in thousands):
For the year ended December 31, 2021For the year ended December 31, 2020For the year ended December 31, 2019
Current Tax Provision (Benefit)
Federal$55 $527 $860 
State44 (452)197 
Total Current Provision for Income Taxes, net99 75 1,057 
Deferred Provision (Benefit) for Income Taxes
Federal— (85)— 
State— 406 — 
Total Deferred Benefit for Income Taxes, net— 321 — 
Total Income Tax Provision, net$99 $396 $1,057 

Deferred Tax Asset and Deferred Tax Liability

    As of December 31, 2021 and December 31, 2020, the Company recorded a deferred tax asset of approximately $13.0 million and $21.0 million, respectively, relating to capital loss carryforward and temporary differences as a result of the timing of income recognition of certain investments held in the TRS. The capital loss carryforwards may only be recognized to the extent of capital gains. There is uncertainty as to the TRS ability to recognize capital gains in the future. As a result, the Company has concluded it is more likely than not the deferred tax asset will not be realized and has recorded a full valuation allowance.

    In addition, the REIT generated net operating losses ("NOLs") during the year ended December 31, 2021 related to ordinary losses on its MBS portfolio and it generated NOLs for the years ended December 31, 2020 and December 31, 2017, related to its swap terminations, and for its California return a portion of the NOLs is apportioned to the TRS. The Company recorded a deferred state tax asset of $18.6 million and $19.3 million in the REIT and $2.0 million and $2.1 million in the TRS
as of December 31, 2021 and December 31, 2020, respectively. The TRS can carryback the NOLs generated during the years ended December 31, 2020 and December 31, 2017 to each of the two preceding years to request a refund for taxes paid. As of December 31, 2021 and December 31, 2020, the Company has concluded it is more likely than not the deferred tax asset relating to the NOLs will not be realized and it has recorded a combined valuation allowance of $20.6 million and $21.4 million, respectively.

    The following tables disclose the components of the Company's deferred tax asset and deferred tax liability at December 31, 2021 and 2020 (dollars in thousands):

Deferred Tax AssetDecember 31, 2021December 31, 2020
Net operating loss available for carry-back and carry-forward (1)
$20,637 $21,402 
Net capital loss carry-forward (1)
11,072 11,966 
Investments1,972 9,061 
Deferred tax asset33,681 42,429 
Allowance(33,681)(42,429)
Net deferred tax asset$— $— 

Deferred Tax LiabilityDecember 31, 2021December 31, 2020
Net operating loss available for carry-back and carry-forward$— $85 
Net deferred tax liability$— $85 
(1) Net operating loss available for carry-forward begin to expire in 2037. Net capital loss available for carry-forward begin to expire in 2022.

Reconciliation of Tax Rate to Effective Tax Rate

    The Company's effective tax rate differs from its combined federal and state income tax rate primarily due to the deduction of dividends distributions to be paid under Code Section 857(a). The reconciliation of these rates are as follows:

For the year ended December 31, 2021For the year ended December 31, 2020
Federal statutory rate21.0 %21.0 %
State statutory rate, net of federal benefit(4.4)%1.5 %
Other0.2 %— %
Change in valuation allowance13.8 %(4.4)%
REIT earnings not subject to corporate taxes(30.8)%(18.2)%
Effective Tax Rate(0.2)%(0.1)%