INCOME TAXES

The operations conducted by the Company’s real estate investment trust (“REIT”) entities are generally not subject to U.S. federal and state income tax. The New Zealand JV is subject to corporate level tax in New Zealand. Non-REIT qualifying operations are conducted by the Company’s taxable REIT subsidiaries (“TRS”). The primary businesses performed in Rayonier’s taxable REIT subsidiaries include log trading and certain real estate activities, such as the sale and entitlement of development HBU properties.

Provision for Income Taxes

The Company’s effective tax rate is below the 35.0% U.S. statutory rate due to tax benefits associated with being a REIT. The income tax benefits for the three months ended March 31, 2016 and 2015 are principally related to the New Zealand JV.

The table below reconciles the U.S. statutory rate to the Company’s effective tax rate for each period presented:



	Three Months Ended March 31,
	2016					2015
Income tax expense at federal statutory rate		($4,997	)	35.0	%		($6,198	)	35.0	%
U.S. and foreign REIT income & U.S. TRS taxable losses	4,360			(30.6	)	7,502			(42.4	)
Foreign TRS operations	117			(0.8	)	1,137			(6.4	)
U.S. net deferred tax asset valuation allowance	(452		)	3.2		(1,812		)	10.2
Other	(80		)	0.6		(158		)	0.9
Income tax (expense) benefit before discrete items		($1,052	)	7.4	%		$471		(2.7	)%
Tax benefit recognized related to changes in the New Zealand JV deferred tax inventory	1,833			(12.9	)	—			—
Income tax benefit as reported		$781		(5.5	)%		$471		(2.7	)%