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 it 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):

	March 31, 2015		December 31, 2014
Deferred tax assets:
Solar investment tax credit	$	2,116	$	2,116
Federal and state net operating loss		2,131		2,284
Other		22		22
Less: valuation allowance		(3,849)		(4,002)
Total deferred tax assets		420		420
Deferred tax liabilities:
Deferred revenue		-		-
Depreciation and amortization		(420)		(420)
Total deferred tax liabilities		(420)		(420)
Net deferred tax assets	$	-	$	-

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. For the three months ended March 31, 2015, the valuation allowance decreased by $0.2 million due to the estimated use of certain state net operating losses. The Company had no unrecognized tax benefits as of March 31, 2015 and December 31, 2014.

As of March 31, 2015 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 the tax years before 2010.