INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

17. INCOME TAXES

The Company has elected to be taxed as a REIT under the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that the Company distributes at least 90% of its taxable income to its stockholders. As a REIT, the Company generally will not be subject to corporate level federal income tax on net income that is currently distributed to stockholders.

The Company has wholly owned TRS’s which are subject to federal and state income taxes. The income generated from the TRS’s is taxed at normal corporate rates.

The provision for income taxes results in effective tax rates that differ from federal and state statutory rates. A reconciliation of the provision for income tax attributable to the TRSs’ income from continuing operations computed at federal statutory rates to the income tax provision reported in the financial statements is as follows:

	Year Ended December 31,
	2024		2023
	(in thousands)
Income from continuing operations before income taxes for TRSs	$	3,742	$	4,711
Expected federal income tax provision	$	785	$	989
State income taxes	1		44
Change in valuation allowance	151		(2,619)
Other	(139)		2,814
Income tax provision	$	798	$	1,228

The components of the Company’s net deferred tax asset, which are included in other assets, are as follows:

	December 31,
	2024		2023
	(in thousands)
Deferred tax assets:
Net operating losses	$	196	$	44
Secured borrowings—government guaranteed loans	5		21
Other	286		232
Total gross deferred tax assets	487		297
Valuation allowance	(205)		(52)
	282		245
Deferred tax liabilities:
Loans receivable	—		—
	—		—
Deferred tax asset, net	$	282	$	245

The net operating loss carryforwards as of December 31, 2024 and 2023 were generated by TRSs and are available to offset future taxable income of these TRSs. 

The increase in the valuation allowance recorded in 2024 was $151,000.

The periods subject to examination for the Company’s federal and state income tax returns are 2021 through 2024. As of December 31, 2024 and 2023, no reserves for uncertain tax positions have been established and the Company does not anticipate any material changes in the amount of unrecognized tax benefits recorded to occur within the next 12 months.

The Tax Cuts and Jobs Act of 2017, signed into law in late December 2017, made sweeping changes to provisions of the Code applicable to businesses. The CARES Act, signed into law in March 2020, made additional changes to provisions on the Code applicable to the businesses. The Inflation Reduction Act, signed into law in August 2022 also made changes to the Code applicable to businesses. Management has reviewed these statutory changes and determined that the impact to the Company’s consolidated financial statements is not material.