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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES
15. INCOME TAXES
The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2015. As such, the Company’s income is generally not subject to U.S. federal, state and local corporate income taxes other than as described below.
Certain of the Company’s subsidiaries have elected to be treated as TRSs. TRSs permit the Company to participate in certain activities from which REITs are generally precluded, as long as these activities meet specific criteria, are conducted within the parameters of certain limitations established by the Code, and are conducted in entities which elect to be treated as taxable subsidiaries under the Code. To the extent these criteria are met, the Company will continue to maintain its qualification as a REIT. The Company’s TRSs are not consolidated for U.S. federal income tax purposes, but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred taxes is established for the portion of earnings recognized by the Company with respect to its interest in TRSs.

Components of the provision for income taxes consist of the following ($ in thousands):
 Year Ended December 31,
202320222021
Current expense (benefit) 
U.S. federal$2,204 $1,823 $(280)
State and local858 3,591 936 
Total current expense (benefit)3,062 5,414 656 
Deferred expense (benefit)  
U.S. federal964 (445)311 
State and local218 (60)(39)
Total deferred expense (benefit)1,182 (505)272 
Provision for income tax expense (benefit)$4,244 $4,909 $928 

A reconciliation between the U.S. federal statutory income tax rate and the effective tax rate for the years ended December 31, 2023, 2022 and 2021 is as follows:
Year Ended December 31,
 202320222021
U.S. statutory tax rate21.00 %21.00 %21.00 %
REIT income not subject to corporate income tax(15.22)%(18.09)%(17.72)%
Increase due to state and local taxes1.07 %0.59 %(0.46)%
Change in valuation allowance(1.57)%(1.17)%(1.20)%
Offshore non-taxable income(3.79)%(1.35)%(3.75)%
Uncertain tax position recorded (released)0.14 %1.45 %— %
Section 163 (j) interest expense limitation0.17 %0.08 %0.27 %
REIT income taxes0.14 %0.28 %(0.31)%
Return to provision(0.23)%(0.64)%1.64 %
Net operating loss carryback benefit— %— %— %
Other2.34 %0.74 %2.14 %
Effective income tax rate4.05 %2.89 %1.61 %

The differences between the Company’s statutory rate and effective tax rate are largely determined by the amount of income subject to tax by the Company’s TRS subsidiaries. The Company expects that its future effective tax rate will be determined in a similar manner.

As of December 31, 2023 and 2022, the Company’s net deferred tax assets (liabilities) were $(3.0) million and $(1.8) million, respectively, and are included in other assets (liabilities) in the Company’s consolidated balance sheets. The Company believes that, other than the specific deferred tax assets described below, it is more likely than not that the net deferred tax assets will be realized in the future. Realization of the net deferred tax assets (liabilities) is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences. The amount of net deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.
The Company has recorded deferred tax assets related to net operating losses in the taxable REIT subsidiaries that are expected to be fully utilized in future periods. The net operating loss subject to unlimited carryforward is $8.0 million as of December 31, 2023.

The components of the Company’s deferred tax assets and liabilities are as follows ($ in thousands):
December 31, 2023December 31, 2022
Deferred Tax Assets 
Net operating loss carryforward$2,069 $3,493 
Net unrealized losses721 641 
Capital losses carryforward2,813 4,356 
Valuation allowance(2,813)(4,356)
Interest expense limitation1,560 1,385 
Valuation allowance(1,560)(1,385)
Total Deferred Tax Assets$2,790 $4,134 

December 31, 2023December 31, 2022
Deferred Tax Liability 
Basis difference in operating partnerships$5,749 $5,911 
Total Deferred Tax Liability$5,749 $5,911 
 
As of December 31, 2023, the Company had $2.8 million of deferred tax assets relating to capital losses which it may only use to offset capital gains. As of December 31, 2022, the Company had $4.4 million of deferred tax assets relating to capital losses which it may only use to offset capital gains. These tax attributes will begin to expire if unused in 2024. As the realization of these assets are not more likely than not before their expiration, the Company has provided a full valuation allowance against these deferred tax assets.

The Company’s tax returns are subject to audit by taxing authorities. Generally, as of December 31, 2023, the tax years 2019-2023 remain open to examination by the major taxing jurisdictions in which the Company is subject to taxes. One of the Company’s subsidiary entities is currently under an IRS audit for tax year 2020 and also under audit in New York City for tax years 2014-2020. The Company does not expect these audits to result in any material changes to the Company’s financial position. In April 2023, a settlement was reached for $2.6 million with New York City pertaining to an audit of the
Company for the years 2012-2013 resulting in an incremental income tax expense of $0.2 million for the twelve months ended December 31, 2023. The Company does not expect tax expense to have an impact on either short or long-term liquidity or capital needs.
As of December 31, 2023, the Company did not have any unrecognized tax benefits. As of December 31, 2022, the Company had an unrecognized tax benefit of $2.4 million, which is included in the accrued expenses in the Company’s consolidated balance sheets. This unrecognized tax benefit, if recognized, would have a favorable impact on our effective income tax rate in future periods. As of December 31, 2023, the Company has not recognized a significant amount of any interest or penalties related to uncertain tax positions. In addition, the Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record a significant liability for unrecognized tax benefits within the next twelve months.