Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Combined Activity and Taxable Activity

The following represents the combined activity of the Company’s TRS (in thousands):

	For the Year Ended December 31,
	2017		2016		2015
Book income (loss) before income taxes	$	11,180	$	9,953	$	(1,446	)
Current	$	459	$	17	$	—
Deferred		—		—		—
Total income tax expense	$	459	$	17	$	—

Summary of Differences Between Total Income Tax Expense Statutory Federal Income Tax Rate

The differences between total income tax expense and the amount computed by applying the statutory income tax rate to income before taxes with respect to its TRS activity were as follows (in thousands):

	For the Year Ended December 31,
TRS	2017			2016			2015
Statutory Rate		34	%		34	%		34	%
Statutory rate applied to pre-tax income	$	3,801		$	3,384		$	(492	)
State tax expense net of federal income tax		254			498			(72	)
State deferred tax expense net of federal income tax		724			—			—
Permanent items		(241	)		—			—
Deferred tax impact of federal rate change		19,391			—			—
Valuation allowance decrease based on impact of federal rate change^(A)		(23,470	)		(4,039	)		(1,169	)
Other		—			174			1,733
Total expense	$	459		$	17		$	—
Effective tax rate		4.11	%		0.17	%		0.00	%

(A)

For the year ended December 31, 2017, includes $19.4 million deferred tax impact of federal tax rate change.

Summary of Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities of the Company’s TRS were as follows (in thousands):

	For the Year Ended December 31,
	2017			2016
Deferred tax assets^(A)	$	37,940		$	61,742
Deferred tax liabilities		(72	)		(404	)
Valuation allowance		(37,868	)		(61,338	)
Net deferred tax asset	$	—		$	—

(A)

Primarily attributable to net operating losses, aggregating $24.9 million at December 31, 2017, and interest expense, subject to limitations and basis differentials in assets due to purchase price accounting. The TRS net operating loss carryforwards will expire in varying amounts between the years 2022 through 2035.

Reconciliation of GAAP Net (Loss) Income Attributable to Taxable Income

Reconciliation of GAAP net (loss) income attributable to DDR to taxable income is as follows (in thousands):

	For the Year Ended December 31,
	2017			2016			2015
GAAP net (loss) income attributable to DDR	$	(241,685	)	$	60,012		$	(72,168	)
Plus: Book depreciation and amortization^(A)		336,530			376,493			385,696
Less: Tax depreciation and amortization^(A)		(214,298	)		(224,766	)		(228,882	)
Book/tax differences on losses from capital transactions		(195,294	)		(155,170	)		(149,507	)
Joint venture equity in earnings, net^(A)		(9,537	)		(3,802	)		8,491
Deferred income		(26,032	)		(8,352	)		(4,293	)
Compensation expense		4,093			(5,237	)		(18,879	)
Impairment charges		406,580			110,906			280,930
Senior convertible notes – accretion adjustment		—			—			9,954
Senior convertible notes – repurchase premium		—			—			(52,390	)
Puerto Rico tax prepayment		12,237			—			(16,812	)
Miscellaneous book/tax differences, net		8,409			(2,625	)		(10,204	)
Taxable income before adjustments		81,003			147,459			131,936
Less: Capital gains		—			—			—
Taxable income subject to the 90% dividend requirement	$	81,003		$	147,459		$	131,936

(A)

Depreciation expense from majority-owned subsidiaries and affiliates, which is consolidated for financial reporting purposes but not for tax reporting purposes, is included in the reconciliation item “Joint venture equity in earnings, net.”

Reconciliation Between Cash Dividends Paid and Dividends Paid Deduction

Reconciliation between cash dividends paid and the dividends paid deduction is as follows (in thousands):

	For the Year Ended December 31,
	2017			2016			2015
Dividends paid	$	304,973		$	293,031		$	264,243
Plus: Deemed dividends on convertible debt		—			—			14,159
Less: Dividends designated to prior year		(5,594	)		(5,594	)		(5,594	)
Plus: Dividends designated from the following year		8,383			5,594			5,594
Less: Return of capital		(226,759	)		(145,572	)		(146,466	)
Dividends paid deduction	$	81,003		$	147,459		$	131,936