Income Taxes (Notes)

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Income Tax

Income Taxes

The Company qualifies and has elected to be taxed as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code").  The Company will generally not be subject to federal income tax to the extent that it distributes its taxable income to the Company's stockholders, and as long as Parkway satisfies the ongoing REIT requirements including meeting certain asset, income and stock ownership tests.

The Company has elected to treat certain consolidated subsidiaries as taxable REIT subsidiaries, which are tax paying entities for income tax purposes and are taxed separately from the Company.  Taxable REIT subsidiaries may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to federal and state income tax at regular corporate tax rates.

In connection with the contribution of the Eola management company to the Company, the Company recorded a deferred tax liability representing differences between the tax basis and GAAP basis of the acquired assets and liabilities (primarily related to the management company contracts) multiplied by the effective tax rate.  The Company was required to record these deferred tax liabilities as a result of the management company becoming a C corporation at the time it was acquired.  The Company's net deferred tax liabilities as of September 30, 2013 and December 31, 2012, were $256,000 and $2.0 million, respectively.

The Company's income tax benefit for the three months ended September 30, 2013 was $839,000, consisting of a deferred income tax benefit of $568,000 and a current income tax benefit of $271,000. The Company's income tax benefit for the three months ended September 30, 2012 was $7,000, consisting of a deferred income tax benefit of $238,000, offset by $231,000 of current federal and state income tax expense resulting from taxable REIT subsidiary income.

The Company's income tax benefit for the nine months ended September 30, 2013 was approximately $1.7 million, consisting of a deferred income tax benefit of $1.7 million and a current income tax benefit of $26,000. The Company's provision for income taxes for the nine months ended September 30, 2012, was $143,000, consisting of $860,000 of current federal and state income tax expense resulting from taxable REIT subsidiary income, offset by a $717,000 deferred income tax benefit.