Income Tax Considerations (Tables)

12 Months Ended

Dec. 31, 2019

Schedule Of Reconciling Net Income Adjusted For Noncontrolling Interests To REIT Taxable Income

The following table reconciles net income adjusted for noncontrolling interests to REIT taxable income (in thousands):



	Year Ended December 31,
	2019			2018			2017
Net income adjusted for noncontrolling interests	$	315,435		$	327,601		$	335,274
Net (income) loss of taxable REIT subsidiary included above	(32,225		)	(13,496		)	4,220
Net income from REIT operations	283,210			314,105			339,494
Book depreciation and amortization	132,957			158,607			162,964
Tax depreciation and amortization	(75,824		)	(89,700		)	(95,512		)
Book/tax difference on gains/losses from capital transactions	(89,217		)	19,807			6,261
Deferred/prepaid/above and below-market rents, net	(9,332		)	(15,589		)	(11,146		)
Impairment loss from REIT operations	3,118			10,008			5,071
Other book/tax differences, net	(21,358		)	(13,718		)	(244		)
REIT taxable income	223,554			383,520			406,888
Dividends paid deduction⁽¹⁾	(223,554		)	(383,520		)	(406,888		)
Dividends paid in excess of taxable income	$	—		$	—		$	—

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(1)

For 2019, 2018 and 2017, the dividends paid deduction includes designated dividends of $121.2 million, $105.7 million and $112.8 million from 2020, 2019 and 2018, respectively.

Schedule Of Cash Dividends Distributed To Common Shareholders

For federal income tax purposes, the cash dividends distributed to common shareholders are characterized as follows:



	Year Ended December 31,
	2019		2018		2017
Ordinary income	65.4	%	42.2	%	23.0	%
Capital gain distributions	34.6	%	57.8	%	77.0	%
Total	100.0	%	100.0	%	100.0	%

Schedule Of Deferred Tax Assets And Liabilities

Our deferred tax assets and liabilities, including a valuation allowance, consisted of the following (in thousands):



	December 31,
	2019			2018
Deferred tax assets:
Impairment loss ⁽¹⁾	$	4,692		$	4,732
Net operating loss carryforwards ⁽²⁾	3,206			11,132
Straight-line rentals	—			1,391
Book-tax basis differential	1,101			1,800
Other ⁽⁴⁾	177			201
Total deferred tax assets	9,176			19,256
Valuation allowance ⁽³⁾	(5,749		)	(12,787		)
Total deferred tax assets, net of allowance	$	3,427		$	6,469
Deferred tax liabilities:
Book-tax basis differential ⁽¹⁾	$	1,547		$	6,005
Other	155			398
Total deferred tax liabilities	$	1,702		$	6,403

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(1)	Impairment losses and book-tax basis differential liabilities will not be recognized until the related properties are sold. Realization of impairment losses is dependent upon generating sufficient taxable income in the year the property is sold.


(2)	We have net operating loss carryforwards of $15.3 million that is an indefinite carryforward.


(3)	Management believes it is more likely than not that a portion of the deferred tax assets, which primarily consists of impairment losses and net operating losses, will not be realized and established a valuation allowance. However, the amount of the deferred tax asset considered realizable could be reduced if estimates of future taxable income are reduced.

(4)

Classification of prior year's amounts were made to conform to the current year presentation.

Schedule of Income Tax Provision (Benefit)

We are subject to federal, state and local income taxes and have recorded an income tax provision (benefit) as follows (in thousands):



	Year Ended December 31,
	2019			2018			2017
Net income (loss) before taxes of taxable REIT subsidiary	$	32,602		$	13,480		$	(5,788	)
Federal provision (benefit) ⁽¹⁾	$	6,846		$	2,831		$	(2,026	)
Valuation allowance decrease	(7,038		)	(2,800		)	—
Effect of change in statutory rate on net deferrals	—			—			282
Other	569			(46		)	176
Federal income tax provision (benefit) of taxable REIT subsidiary ⁽²⁾	377			(15		)	(1,568		)
State and local taxes, primarily Texas franchise taxes	663			1,393			1,551
Total	$	1,040		$	1,378		$	(17	)

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(1)	At statutory rate of 21% for both the year ended December 31, 2019 and 2018 and 35% for the year ended December 31, 2017.

(2)

All periods from December 31, 2016 through December 31, 2019 are open for examination by the IRS.