Income Taxes

12 Months Ended

Dec. 31, 2019

The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gains) to its shareholders. It is the Company's current intention to adhere to these requirements and maintain the Company's qualification for taxation as a REIT. As a REIT, the Company generally is not subject to federal corporate income tax on that portion of its taxable income that is currently distributed to shareholders. However, as a REIT, the Company is still subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, taxable income of TRSs, including our TRS lessees, are subject to federal, state and local income taxes.

For federal income tax purposes, the cash distributions paid to the Company’s common shareholders and preferred shareholders may be characterized as ordinary income, return of capital (generally non-taxable) or capital gains. Tax law permits certain characterization of distributions which could result in differences between cash basis and tax basis distribution amounts.

The following characterizes distributions paid per common share and preferred share on a tax basis for the years ended December 31, 2019, 2018 and 2017:



	2019				2018				2017
	Amount		%		Amount		%		Amount		%
Common Shares:
Ordinary non-qualified income	$	0.5609	30.03	%	$	1.2040	77.57	%	$	1.3611	95.41	%
Qualified dividend	0.0069		0.37	%	0.3482		22.43	%	0.0256		1.79	%
Capital gain	1.3000		69.60	%	—		—	%	—		—	%
Return of capital	—		—	%	—		—	%	0.0399		2.80	%
Total	$	1.8678	100.00	%	$	1.5522	100.00	%	$	1.4266	100.00	%

Series C Preferred Shares:
Ordinary non-qualified income	$	0.6100	30.03	%	$	1.2605	77.57	%	$	1.1969	98.20	%
Qualified dividend	0.0075		0.37	%	0.3645		22.43	%	0.0219		1.80	%
Capital gain	1.4138		69.60	%	—		—	%	—		—	%
Return of capital	—		—	%	—		—	%	—		—	%
Total	$	2.0313	100.00	%	$	1.6250	100.00	%	$	1.2188	100.00	%

Series D Preferred Shares:
Ordinary non-qualified income	$	0.5982	30.03	%	$	1.2363	77.57	%	$	1.1739	98.21	%
Qualified dividend	0.0074		0.37	%	0.3575		22.43	%	0.0214		1.79	%
Capital gain	1.3866		69.60	%	—		—	%	—		—	%
Return of capital	—		—	%	—		—	%	—		—	%
Total	$	1.9922	100.00	%	$	1.5938	100.00	%	$	1.1953	100.00	%

Series E Preferred Shares: ⁽¹⁾
Ordinary non-qualified income	$	0.5982	30.03	%	$	—	—	%	$	—	—	%
Qualified dividend	0.0074		0.37	%	—		—	%	—		—	%
Capital gain	1.3866		69.60	%	—		—	%	—		—	%
Return of capital	—		—	%	—		—	%	—		—	%
Total	$	1.9922	100.00	%	$	—	—	%	$	—	—	%

Series F Preferred Shares: ⁽¹⁾
Ordinary non-qualified income	$	0.5912	30.03	%	$	—	—	%	$	—	—	%
Qualified dividend	0.0073		0.37	%	—		—	%	—		—	%
Capital gain	1.3703		69.60	%	—		—	%	—		—	%
Return of capital	—		—	%	—		—	%	—		—	%
Total	$	1.9688	100.00	%	$	—	—	%	$	—	—	%

⁽¹⁾ Issued upon completion of the Company's merger with LaSalle on November 30, 2018.

Of the common distribution declared on December 15, 2016 and paid on January 17, 2017, $0.2866 was treated as a 2017 distribution for tax purposes. The preferred share distributions declared on December 15, 2016 and paid on January 17, 2017 were treated as 2016 distributions for tax purposes.

Of the common distribution declared on December 15, 2017 and paid on January 12, 2018, $0.3800 was treated as a 2018 distribution for tax purposes. The preferred share distributions declared on December 15, 2017 and paid on January 12, 2018 were treated as 2018 distributions for tax purposes.

Of the common distributions declared on November 19, 2018 and December 14, 2018 and paid on January 15, 2019, $0.3478 was treated as a 2019 distribution for tax purposes. The preferred share distributions declared on December 14, 2018

and paid on January 15, 2019, $0.4063 per Series C Preferred Share, $0.3984 per Series D Preferred Share, $0.3984 per Series E Preferred Share and $0.3938 per Series F Preferred Share, were treated as 2019 distributions for tax purposes.

Of the common distribution declared on December 16, 2019 and paid on January 15, 2020, $0.3800 was treated as a 2019 distribution for tax purposes. The preferred share distributions declared on December 16, 2019 and paid on January 15, 2020 were treated as 2019 distributions for tax purposes.

The Company's provision (benefit) for income taxes consists of the following (in thousands):



	For the year ended December 31,
	2019			2018			2017
Federal
Current	$	3,061		$	1,696		$	4
Deferred	(106		)	(248		)	(89		)
State and local
Current	3,938			360			42
Deferred	(1,721		)	(66		)	224
Income tax expense (benefit)	$	5,172		$	1,742		$	181

A reconciliation of the statutory federal tax expense (benefit) to the Company's income tax expense (benefit) is as follows (in thousands):



	For the year ended December 31,
	2019			2018			2017
Statutory federal tax expense (benefit)	$	25,388		$	3,177		$	35,155
State income tax expense (benefit), net of federal tax expense (benefit)	943			300			264
REIT income not subject to tax	(21,522		)	(1,828		)	(35,573		)
Other	363			93			335
Income tax expense (benefit)	$	5,172		$	1,742		$	181

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and local jurisdictions, where applicable. As of December 31, 2019 and 2018, the statute of limitations remains open for all major jurisdictions for tax years dating back to 2015.