Note 13 - Income Taxes

3 Months Ended

Mar. 31, 2013

Income Tax Disclosure [Text Block]

Note 13 – Income Taxes

We intend to qualify and will elect to be taxed as a REIT under the Code for the year ended December 31, 2012 upon filing our federal income tax return for that year. We will generally not be subject to federal income tax to the extent that we distribute our taxable income to our stockholders and as long as we satisfy the ongoing REIT requirements under the Code including meeting certain asset, income and stock ownership tests.

The following table reconciles our GAAP net income to estimated REIT taxable income for the quarter ended March 31, 2013.

	March 31, 2013
	(in thousands)
GAAP Net income	$	10,976
Book to tax differences :
Net book/tax differences on Non-Agency Securities		(1,726	)
Unrealized change in the fair value of derivatives		(3,444	)
Income tax expense		2
Estimated taxable income	$	5,808

The aggregate tax basis of our assets and liabilities is greater than our total Stockholders’ Equity at March 31, 2013 by approximately $14.6 million, or approximately $1.95 per share (based on the 7,500,050 shares then outstanding).

We are required and intend to timely distribute substantially all of our REIT taxable income in order to maintain our REIT status. For the quarter ended March 31, 2013, we paid dividends of $0.23 per outstanding share of common stock for each month of the quarter, resulting in total payments to stockholders of $5.2 million. Our estimated REIT taxable income available to pay dividends was $5.8 million for the quarter ended March 31, 2013. As of March 31, 2013, undistributed retained earnings totaled $8.4 million or approximately $1.13 per share and under distributed estimated REIT taxable income was $2.7 million, or approximately $0.35 per share (per share amounts are based on the 7,500,050 shares then outstanding).

Our management is responsible for determining whether tax positions taken by us are more likely than not to be sustained on their merits. We have no material unrecognized tax benefits or material uncertain tax positions.