We have maintained and intend to maintain our election as a REIT under the Code. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement to distribute at least 90% of our taxable income to our stockholders. As a REIT, we generally will not be subject to U.S. federal income tax if we distribute 100% of our taxable income to our stockholders and satisfy certain other requirements; instead, income tax is paid directly by our stockholders on the dividends distributed to them. If our taxable income exceeds our dividends in a tax year, REIT tax rules allow us to designate dividends from the subsequent tax year in order to avoid current taxation on undistributed income. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes at regular corporate rates, including any applicable alternative minimum tax. Taxable income from non-REIT activities managed through our TRS is subject to applicable U.S. federal, state, and local income taxes. Our international subsidiaries are also subject to income taxes in the jurisdictions in which they operate.

From our TRS and our foreign operations, income tax benefit (expense) were as follows (in thousands):

	For the Years Ended December 31,
	2019			2018			2017
Current income tax benefit (expense):
Domestic	$	61		$	125		$	41
Foreign		(1,669	)		(3,294	)		(3,062	)
		(1,608	)		(3,169	)		(3,021	)
Deferred income tax benefit (expense):
Domestic		5,490			3,713			233
Foreign		(1,261	)		(1,471	)		107
		4,229			2,242			340
Income tax benefit (expense)	$	2,621		$	(927	)	$	(2,681	)

A reconciliation of the income tax benefit (expense) at the statutory income tax rate and the effective tax rate for income before income taxes for the years ended December 31, 2019, 2018, and 2017 is as follows (in thousands):

	For the Years Ended December 31,
	2019			2018			2017
Income before income tax	$	373,780		$	1,019,404		$	293,919
Income tax at the U.S. statutory federal rate (21% in 2019 and 2018 and 35% in 2017)		(78,494	)		(214,075	)		(102,872	)
Decrease (increase) in income tax resulting from:
Foreign rate differential		438			2,643			2,326
State income taxes, net of federal benefit		1,621			(379	)		—
U.S. earnings not subject to federal income tax		85,495			208,472			98,026
Equity investments		1,091			46			(3,293	)
Change in valuation allowance		(7,911	)		2,668			5,391
Other items, net		381			(302	)		(2,259	)
Total income tax benefit (expense)	$	2,621		$	(927	)	$	(2,681	)

The foreign provision for income taxes is based on foreign profit before income taxes of $10.7 million in 2019 as compared with foreign profit before income taxes of $18.6 million in 2018, and foreign losses before income taxes of $(0.1) million in 2017.

The domestic provision for income taxes is based on a loss before income taxes of $(44.1) million in 2019 from our TRS as compared with income before income taxes of $8.0 million in 2018 and $13.9 million in 2017.

At December 31, 2019 and 2018, components of our deferred tax assets and liabilities were as follows (in thousands):

	2019			2018
Deferred tax assets:
Operating loss and interest deduction carry forwards	$	28,684		$	21,984
Other		1,711			277
Total deferred tax assets		30,395			22,261
Valuation allowance		(11,355	)		(3,444	)
Total net deferred tax assets	$	19,040		$	18,817
Deferred tax liabilities:
Property and equipment	$	(7,324	)	$	(12,359	)
Net unbilled revenue		(1,449	)		(1,633	)
Partnership investments		—			—
Other		(737	)		(300	)
Total deferred tax liabilities		(9,510	)		(14,292	)
Net deferred tax asset (liability)	$	9,530		$	4,525

	U.S.			Luxembourg			Germany			U.K.			Australia
Gross NOL carryforwards	$	192,358		$	9,946		$	1,426		$	5,416		$	12,939
Tax-effected NOL carryforwards		22,960			2,481			226			921			1,941
Valuation allowance		(6,212	)		(2,481	)		(226	)		(921	)		—
Net deferred tax asset - NOL carryforwards	$	16,748		$	—		$	—		$	—		$	1,941
Expiration periods	2027-indefinite			2034-indefinite			Indefinite			Indefinite			Indefinite

A valuation allowance has been recorded on foreign and domestic net operating loss carryforwards and other net deferred tax assets that may not be realized. As of each reporting date, we consider all new evidence that could impact the future realization of our deferred tax assets. In the evaluation of the need for a valuation allowance on our deferred income tax assets, we consider all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, carryback of future period losses to prior periods, projected future taxable income, tax planning strategies, and recent financial performance.

During 2019, a valuation allowance of $5.9 million has been recorded against a portion of our domestic deferred tax assets to recognize only the components of the deferred tax assets that is more likely than not to be realized. The valuation allowance was primarily recorded against deferred tax assets for federal and state NOLs that we believe will not be realized due to the economic cost that would be incurred to realize these assets. This includes NOLs in states where we no longer maintain nexus and federal and state NOLs that are only available for partial offset of future taxable income.

We also evaluated the need for a valuation allowance on our foreign deferred income tax assets. In doing so, we considered all available evidence to determine whether it is more likely than not that the foreign deferred income tax assets will be realized. Based on our review of all positive and negative evidence, we recorded a partial valuation allowance of $2 million against certain foreign deferred income tax assets generated during the year. Furthermore, we determined the partial valuation allowances recorded in previous years should remain against certain foreign deferred income tax assets that are not expected to be realized through future sources of taxable income.

We have no material uncertain tax position liabilities and related interest or penalties.

We have met the annual REIT distribution requirements by payment of at least 90% of our taxable income in 2019, 2018, and 2017. Earnings and profits, which determine the taxability of such distributions, will differ from net income reported for financial reporting purposes due primarily to differences in cost basis, differences in the estimated useful lives used to compute depreciation, and differences between the allocation of our net income and loss for financial reporting purposes and for tax reporting purposes.

A schedule of per share distributions we paid and reported to our stockholders is set forth in the following:

	For the Years Ended December 31,
	2019		2018		2017
Common share distribution	$	1.010000	$	0.990000	$	0.950000
Ordinary income		0.701910		0.438792		0.655535
Capital gains(1)		0.275040		0.551208		0.021022
Unrecaptured Sec. 1250 gain		0.041160		0.132280		0.004647
Section 199A Dividends		0.701910		0.438792		—
Return of capital		0.033050		—		0.273443

As a partnership, the allocated share of income of the Operating Partnership is included in the income tax returns of the general and limited partners. Accordingly, no accounting for income taxes is generally required for such income of the Operating Partnership. However, the Operating Partnership has formed a TRS on behalf of Medical Properties Trust, Inc., which is subject to U.S. federal, state, and local income taxes at regular corporate rates, and its international subsidiaries are subject to income taxes in the jurisdictions

in which they operate. See discussion above under Medical Properties Trust, Inc. for more details of income taxes associated with our TRS and international operations.