Income Taxes

3 Months Ended

Mar. 31, 2019

11.	Income Taxes

The accompanying condensed consolidated financial statements include an interim tax provision for the three months ended March 31, 2019 and 2018. The components of income tax expense for the three months ended March 31, 2019 and 2018 are as follows:


	Three Months Ended March 31,
	2019			2018
Current:
Federal	$	—		$	(25,250	)
State	―				(5,150	)
Total current expense	―				(30,400	)
Deferred:
Federal		(25,300	)		(593	)
State		(5,233	)		(363	)
Total deferred expense		(30,533	)		(956	)
Income tax expense	$	(30,533	)	$	(31,356	)

11.	Income Taxes (continued)

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of March 31, 2019 and December 31, 2018 are as follows:

	March 31, 2019			December 31, 2018
Carryforwards of net operating loss	$	85,010		$	—
Prepaid rent		35,768			30,533
Valuation allowance		(120,778	)	―
Deferred tax assets, net	$	—		$	30,533

The recording of a valuation allowance relates primarily to a change in judgment about the Company’s ability to realize deferred tax assets in future years, due to its current and foreseeable operations.

A reconciliation of the income tax expense for the three months ended March 31, 2019 and 2018 computed at the statutory federal tax rate on income (loss) before income taxes is as follows:

	Three Months Ended March 31,
	2019					2018
Tax benefit computed at federal statutory rate	$	132,014		21.0	%	$	82,199			21.0	%
Impact of REIT election		(126,781	)	(20.2	)%		(108,042	)		(27.6	)%
State income tax expense		(5,233	)	(0.8	)%		(5,513	)		(1.4	)%
Impact of change in deferred tax asset		90,245		14.4	%		―			―	%
Impact of change in valuation allowance		(120,778	)	(19.2	)%	―			―		%
Income tax expense	$	(30,533	)	(4.8	)%	$	(31,356	)		(8.0	)%

The Company analyzed its material tax positions and determined that it has not taken any uncertain tax positions. The tax years 2016 and forward remain subject to examination by taxing authorities throughout the United States.