4. Income Taxes

We believe we are operating so as to qualify as a REIT under the Internal Revenue Code. Therefore we are not subject to federal income tax as long as we distribute at least 90% of our REIT taxable income to our stockholders each year. As a result, no provision for federal income taxes has been included in the accompanying consolidated financial statements. If we fail to qualify as a REIT, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income and to federal income and excise taxes on our undistributed income.

Our TRSs are subject to federal, state, and local income taxes. As such, deferred income taxes result from temporary differences between the carrying amounts of assets and liabilities of the TRSs for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates in effect in the years in which those temporary differences are expected to reverse. Significant components of the deferred tax assets and liabilities of the TRSs are as follows (in thousands):

Deferred tax assets:	June 30, 2014		December 31, 2013
Solar investment tax credit and NOL (net of valuation allowance of $1,718 and $484)	$	207	$	1,441
Federal Net Operating Loss (net of valuation allowance of $372)		1,722		-
Other		13		101
Total deferred tax assets		1,942		1,542
Deferred tax liabilities:
Deferred revenue		(260)		(260)
Depreciation and amortization		(355)		(355)
Total deferred tax liabilities		(615)		(615)
Net deferred tax assets	$	1,327	$	927

Significant components of our income tax provision are as follows (in thousands):

	Three Months Ended				Six Months Ended
Current:	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
Federal	$	-	$	209	$	-	$	-
State		161		147		-		148
Current expense		161		356		-		148
Deferred:
Federal		274		(198)		(139)		(442)
State		(645)		(52)		(261)		(52)
Deferred benefit		(371)		(250)		(400)		(494)
Income tax expense (benefit)	$	(210)	$	106	$	(400)	$	(346)

We believe it is more likely than not that we will realize the value of our deferred tax assets, net of existing valuation allowances. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. We had no unrecognized tax benefits as of June 30, 2014 and December 31, 2013.