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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
 
We have elected to be taxed as a REIT. As a REIT, we are generally not subject to corporate level income taxes on taxable income we distribute to our stockholders. We have met the annual REIT distribution requirement by distribution of at least 90% of our taxable income to our stockholders.

Income related to our TRSs is subject to federal, state and local taxes at applicable corporate tax rates. Our consolidated tax provision includes the income tax provision related to the operations of the TRSs as well as state and local income taxes related to the Operating Partnership.

The components of income tax expense (benefit) are as follows (in thousands):
For the Years Ended December 31,
 202420232022
Current:
Federal$989 $1,151 $1,953 
State and local1,567 1,563 1,717 
Deferred:
Federal(8,879)84 (59)
State and local(2,420)— — 
Income tax (benefit) expense$(8,743)$2,798 $3,611 
 
Below is a reconciliation between the provision for income taxes and the amounts computed by applying the federal statutory income tax rate to the income or loss before taxes (in thousands):
For the Years Ended December 31,
202420232022
Statutory federal income tax provision$6,331 $(5,317)$1,014 
Nontaxable (income) loss of the REITs(6,260)4,563 1,124 
State income taxes, net of federal tax benefit1,467 1,158 1,644 
Provision to return and deferred adjustment20 50 81 
Effect of permanent differences and other431 235 246 
Deferred assets transferred with REIT stock sale— — 730 
Reversal of federal deferred tax valuation allowance(9,905)— — 
Reversal of state deferred tax valuation allowance, net of federal benefit(2,156)— — 
Other change in valuation allowance1,329 2,109 (1,228)
Income tax (benefit) expense$(8,743)$2,798 $3,611 

The Company evaluates its deferred tax assets each reporting period to determine if it is more-likely-than-not that those assets will be realized. In its evaluation, the Company assesses available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the Company’s existing deferred tax assets.

At December 31, 2024 and 2023, we had valuation allowances of $2.6 million and $13.9 million, respectively. In the fourth quarter of 2024, we determined that it was probable that we would realize the carrying amount of most of our deferred tax assets. As such, we released a substantial portion of our valuation allowance totaling $12.1 million, which resulted in a benefit for income taxes for the year ended December 31, 2024.

Deferred tax assets are included in Other assets and deferred tax liabilities are included in Accrued expenses and other in the accompanying Consolidated Balance Sheets.

Significant components of our TRSs deferred tax assets (liabilities) are as follows (in thousands):
December 31,
 20242023
Tax carryforwards$11,916 $12,098 
Accrued expenses1,515 1,634 
Other445 150 
     Total
13,876 13,882 
Valuation allowance(2,581)(13,886)
     Net deferred tax asset (liability)
$11,295 $(4)
Gross deferred tax assets$13,881 $13,906 
Gross deferred tax liabilities(5)(24)
Valuation allowance(2,581)(13,886)
     Net deferred tax asset (liability)
$11,295 $(4)
 
At December 31, 2024, our TRSs had federal net operating losses of $48.8 million which are not subject to expiration and state net operating losses of $33.6 million, which expire beginning in 2025. At December 31, 2024, Summit Hotel Properties Inc. and our Subsidiary REITs had federal net operating loss carryforwards of $33.1 million and $7.6 million, respectively, which are not subject to expiration.
 
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 December 31, 2024 or in the three-year period then ended. We expect no significant increase or decrease in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2024. We have no material interest or penalties relating to unrecognized tax benefits in the Consolidated Statements of Operations for the years ended December 31, 2024, 2023 or 2022 or in the Consolidated Balance Sheets as of December 31, 2024 or 2023.
 
We file U.S. and state income tax returns in jurisdictions with varying statutes of limitations. In general, we are not subject to tax examinations by tax authorities for years before 2021.
Characterization of Dividends and Distributions (Unaudited)

For income tax purposes, distributions paid consist of ordinary income and capital gains or a combination thereof. For the years ended December 31, 2024, 2023 and 2022 distributions paid per share were characterized as follows:
For the Years Ended December 31,
202420232022
Amount%Amount%Amount%
Common Stock
Ordinary non-qualified dividend income$0.2879 95.96 %$0.1940 88.19 %$0.0471 58.82 %
Ordinary qualified dividend income0.0121 4.04 %0.0078 3.54 %0.0106 13.26 %
Capital gain distributions— — %— — %0.0223 27.92 %
Return of capital— — %0.0182 8.27 %— — %
Total$0.3000 100.00 %$0.2200 100.00 %$0.0800 100.00 %
Preferred Stock - Series E
Ordinary non-qualified dividend income$1.4994 95.96 %$1.3779 88.19 %$0.9191 58.82 %
Ordinary qualified dividend income0.0631 4.04 %0.0553 3.54 %0.2072 13.26 %
Capital gain distributions— — %— — %0.4363 27.92 %
Return of capital— — %0.1293 8.27 %— — %
Total$1.5625 100.00 %$1.5625 100.00 %$1.5626 100.00 %
Preferred Stock - Series F
Ordinary non-qualified dividend income$1.4095 95.96 %$1.2952 88.19 %$0.8639 58.82 %
Ordinary qualified dividend income0.0593 4.04 %0.0520 3.54 %0.1947 13.26 %
Capital gain distributions— — %— — %0.4101 27.92 %
Return of capital— — %0.1215 8.27 %— — %
Total$1.4688 100.00 %$1.4687 100.00 %$1.4687 100.00 %

Ordinary non-qualified dividends are eligible for the 20% deduction provided by Section 199A of the IRC.