Federal Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Federal Income Taxes

NOTE 11 – FEDERAL INCOME TAXES

Characterization of Distributions

The following table characterizes the distributions paid per common share for the years ended December 31, 2016, 2015, and 2014:

	2016					2015					2014
	Amount		Percent			Amount		Percent			Amount		Percent
Ordinary income	$	0.09549		13.26	%	$	0.00000		0.00	%	$	0.01114		1.55	%
Capital gains		0.01425		1.98	%		0.00000		0.00	%		0.00265		0.37	%
Return of capital		0.61026		84.76	%		0.72000		100.00	%		0.70621		98.08	%
	$	0.72		100	%	$	0.72		100	%	$	0.72		100	%

For the year ended December 31, 2016, total distributions paid by the Company for its Series A Preferred Stock, amounted to $7,556,588 or $2.0625 per share (for income tax purposes, $1.79472 characterized as ordinary income and $0.26778 characterized as capital gains). For the year ended December 31, 2015, total distributions paid by the Company for preferred stock, amounted to $7,556,588 or $2.0625 per share (for income tax purposes, $1.36264 characterized as ordinary income, $0.03439 characterized as capital gains and $0.66547 characterized as a return of capital). For the year ended December 31, 2014, total distributions paid by the Company for preferred stock, amounted to $7,556,588 or $2.0625 per share (for income tax purposes, $1.66551 characterized as ordinary income and $0.39699 characterized as capital gains).

For the year ended December 31, 2016, total distributions paid by the Company for its Series B preferred stock, amounted to $7,007,057 or $2.22466 per share (for income tax purposes, $1.93582 characterized as ordinary income and $0.28884 characterized as capital gains).

In addition to the above, taxable income from non-REIT activities conducted by S&F, a Taxable REIT Subsidiary (“TRS”), is subject to federal, state and local income taxes. Deferred income taxes pertaining to S&F are accounted for using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities and their respective tax bases and for operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and other factors. For the years ended December 31, 2016, 2015 and 2014, S&F had operating losses for financial reporting purposes of $2,307,104, $3,550,961 and $3,946,571, respectively. Therefore, a valuation allowance has been established against any deferred tax assets relating to S&F. For the years ended December 31, 2016, 2015 and 2014, S&F recorded $5,000, $15,000 and $15,000, respectively, in federal, state and franchise taxes.