INCOME TAXES

12 Months Ended

Dec. 31, 2021

INCOME TAXES

INCOME TAXES

NOTE 7 – INCOME TAXES

The provision for taxes is as follows (dollars in thousands):

	Year Ended		Year Ended		Year Ended
	December 31, 2021		December 31, 2020		December 31, 2019
Current:
Federal	$	—	$	—	$	—
State		265		306		128
	$	265	$	306	$	128
Deferred:
Federal	$	—	$	—	$	—
State		—		—		—
	$	—	$	—	$	—
Tax expense	$	265	$	306	$	128

The following is a reconciliation of income taxes computed at the U.S. Federal statutory rate to the provision for income taxes:

	Year Ended		Year Ended		Year Ended
	December 31, 2021		December 31, 2020		December 31, 2019
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State taxes	16.7	%	6.3	%	49.7	%
Permanent non-deductible expenses	(0.3)	%	5.0	%	(5.6)	%
Change of valuation allowance	(38.5)	%	(27.8)	%	(71.3)	%
Effective income tax rate	(1.1)	%	4.5	%	(6.2)	%

The composition of our deferred tax assets and liabilities is as follows (dollars in thousands):

	December 31, 2021		December 31, 2020
		As Restated (a)		As Restated
Deferred tax assets:
Charitable contributions	$	1	$	15
Net operating loss carry forwards		66,851		58,635
Depreciation (including air rights)		5,737		4,677
Lease liability		507		571
Other		256		222
Investment in joint ventures		777		678
Accrued expenses		332		132
Total deferred tax assets	$	74,461	$	64,930
Valuation allowance		(70,134)		(60,931)
Deferred tax asset after valuation allowance	$	4,327	$	3,999
Deferred tax liabilities:
Intangibles	$	(3,003)	$	(3,334)
Other		(253)		—
Pension costs		(571)		(114)
Right-of-use asset		(500)		(551)
Total deferred tax liabilities	$	(4,327)	$	(3,999)
Net deferred tax assets	$	—	$	—
Current deferred tax assets	$	—	$	—
Long-term deferred tax assets		—		—
Total deferred tax assets	$	—	$	—
(a) Amounts are restated. See Note 3 for more information.

Effects of the Tax Cuts and Jobs Act

On March 27, 2020, the "Coronavirus Aid, Relief, and Economic Security (CARES) Act" was signed into law.  The CARES Act, suspended the limitations under the TCJA on the use of NOLs for tax years beginning before January 1, 2021, and allowed losses arising in taxable years beginning after December 31, 2017 and before January 1, 2021 to be carried back up to five years. The CARES Act also accelerated the ability of corporations to recover AMT credits, permitting a full refund for tax years 2018 and 2019. Additionally, the CARES Act included provisions relating to refundable payroll tax credits, deferral of employer side social security payments, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. It also appropriated funds for the SBA Paycheck Protection Program loans that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19.

Pursuant to the tax legislation known as the Tax Cuts and Jobs Act (the "TCJA") of 2017, corporate alternative minimum tax (“AMT”) credit carryforwards are eligible for a 50% refund in tax years 2018 through 2020, and beginning in tax year 2021, any remaining AMT credit carryforwards are 100% refundable. As a result of these new rules, we had recorded a tax benefit and refund receivable of $3.1 million in connection with our valuation allowance release. We received approximately $1.6 million of the refund receivable in October 2019 and the balance of approximately $1.5 million became fully refundable in 2020 as a result of the CARES Act, and was received in July 2020.

Other

As of December 31, 2021, we had federal NOLs of approximately $254.8 million. NOLs generated prior to tax-year 2018 will expire in years through fiscal 2037 while NOLs generated in 2018 and forward carry-over indefinitely. The gain resulting from the conveyance of the school condominium to the SCA was fully offset by our available NOL carryforward.  Since 2009 through December 31, 2021, we have utilized approximately $22.5 million of our federal NOLs.  As of December 31, 2021, we also had state NOLs of approximately $161.7 million. These state NOLs have various expiration dates through 2039, if applicable. We also had New York State and New York City prior NOL

conversion (“PNOLC”) subtraction pools of approximately $24.3 million and $19.3 million, respectively. The conversion to the PNOLC under the New York State and New York City corporate tax reforms does not have any material tax impact.

Based on management’s assessment, we believe it is more likely than not that the entire deferred tax assets will not be realized by future taxable income or tax planning strategy. In recognition of this risk, we have provided a valuation allowance of $70.1 million and $60.9 million as of December 31, 2021 and 2020, respectively. If our assumptions change and we determine we will be able to realize these NOLs, the tax benefits relating to any reversal of the valuation allowance in deferred tax assets would be recognized as a reduction of income tax expense and an increase in stockholders equity.