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INCOME TAXES
9 Months Ended
Sep. 30, 2015
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
7. INCOME TAXES  
 
As previously reported, during the fourth quarter of 2014 the Company discovered that it fell short of meeting the 75% asset test.  Management has taken the necessary steps to meet the test and filed its REIT tax return on September 15, 2015.
 
The Company (excluding CII) as a qualifying real estate investment trust distributes its taxable ordinary income to stockholders in conformity with requirements of the Internal Revenue Code and is not required to report deferred items due to its ability to distribute all taxable income. In addition, net operating losses can be carried forward to reduce future taxable income but cannot be carried back.
 
The Company’s 95%-owned subsidiary, CII, files a separate income tax return and its operations are not included in the REIT’s income tax return.
 
The Company accounts for income taxes in accordance with ASC Topic 740, “Accounting for Income Taxes”. ASC Topic 740 requires a Company to use the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred taxes only pertain to CII. As of September 30, 2015 the Company has recorded a net deferred tax liability of $217,000 as a result of timing differences associated with the carrying value of the investment in affiliate (TGIF) and other investments. CII’s NOL carryover to 2015 is estimated at $1.1 million expiring in 2034 and has been fully reserved due to CII historically having tax losses.
 
The provision for income taxes in the consolidated statements of comprehensive income consists of the following:
 
Nine months ended September 30,
 
2015
 
2014
 
Current:
 
 
 
 
 
 
 
Federal
 
$
-
 
$
-
 
State
 
 
-
 
 
-
 
 
 
 
-
 
 
-
 
Deferred:
 
 
 
 
 
 
 
Federal
 
$
157,000
 
$
(19,000)
 
State
 
 
18,000
 
 
(1,000)
 
 
 
 
175,000
 
 
(20,000)
 
(Addition to) release of valuation allowance
 
 
(175,000)
 
 
20,000
 
Total
 
$
-
 
$
-
 
 
We adopted the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” on January 1, 2007. This topic clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with ASC Topic 740, “Accounting for Income Taxes”, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Topic 740-10 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
     
Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our consolidated financial statements. Our evaluation was performed for the tax years ended since December 31, 2011 which are the tax years which remain subject to examination by major tax jurisdictions as of September 30, 2015.
     
We may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it has been classified in the consolidated financial statements as selling, general and administrative expense.