INCOME TAXES

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

As a REIT, we generally will not be subject to corporate-level U.S. federal income tax on ordinary income and capital gains income generated by our REIT activities that we distribute to our stockholders. We are subject to federal and state income taxes on the earnings of our TRS Lessees. In addition, our Operating Partnership is subject to tax in a limited number of local and state jurisdictions.

The Company recorded income tax expense of $0.2 million and $0.7 million for the three months ended September 30, 2022 and 2021, respectively. The Company recorded income tax expense of $4.6 million and $1.1 million for the nine months ended September 30, 2022 and 2021, respectively. There is variation in the quarterly income tax provision (benefit) recorded in the current year as a result of certain provisions of ASC No. 740, Income Taxes. These variations in the income tax expense (benefit) recorded in the interim periods of the current year is the result of variations in quarterly net income (loss) before taxes.

Due to the effects of the Pandemic, certain of our TRS Lessees have incurred operating losses in the past and are expected to be in a cumulative loss for the foreseeable future.  A cumulative loss is significant negative evidence that the realizability of our deferred tax assets at September 30, 2022 is not reasonably assured. Therefore, we have recorded a valuation allowance against substantially all our deferred tax assets at September 30, 2022.

The Company files tax returns in federal and various state and local jurisdictions. In the normal course of business, we are subject to examination by federal, state, and local jurisdictions where applicable. We had no unrecognized tax benefits at September 30, 2022. We expect no significant changes in unrecognized tax benefits within the next year.