5. Income Taxes

The Company believes it is operating so as to qualify as a REIT under the Internal Revenue Code. Therefore, it is not subject to federal income tax as long as the Company distributes at least 90% of its REIT taxable income to its stockholders each year. As a result, no provision for federal income taxes has been included in the accompanying consolidated financial statements. If the Company fails to qualify as a REIT, it will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income and to federal income and excise taxes on its undistributed income. The Company’s 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):

	2014		2013
Deferred tax assets:
Solar investment tax credit	$	2,116	$	1,924
Federal and state net operating loss		2,284		79
Other		22		23
Less: valuation allowance		(4,002)		(484)
Total deferred tax assets		420		1,542
Deferred tax liabilities:
Deferred revenue		-		(260)
Depreciation and amortization		(420)		(355)
Total deferred tax liabilities		(420)		(615)
Net deferred tax assets	$	-	$	927

The Company has a federal net operating loss ("NOL") of approximately $5.9 million at December 31, 2014, which will expire in 2034. Additionally, the Company has state NOLs of approximately $7.8 million and $1.3 million at December 31, 2014 and 2013, respectively, that will expire at various times between 2018 and 2034.

Significant components of the Company’s income tax provision are as follows (in thousands):

	December 31, 2014		December 31, 2013		December 31, 2012
Current:
Federal	$	-	$	-	$	150
State		-		200		206
Current expense		-		200		356
Deferred:
Federal		815		(885)		-
State		(84)		(42)		-
Deferred expense (benefit)		731		(927)		-
Income tax expense (benefit)	$	731	$	(727)	$	356

Due to the Company’s decision to discontinue construction and development operations, it believes it is more likely than not that the Company will not realize the value of its deferred tax assets, net of valuation allowance. Therefore, an increase of the valuation allowance of approximately $3.5 million was recorded during the year ended December 31, 2014. The Company had no unrecognized tax benefits as of December 31, 2014 and December 31, 2013.

As of December 31, 2014, the Company is not under an income tax examination by the Internal Revenue Service (“IRS”) or by any state or local taxing authority. The Company is no longer subject to income tax examinations by the IRS for tax years before 2011, or by state or local income tax authorities for tax years before 2010.