Income Taxes

The Company has elected to be taxed as a REIT under the applicable provisions of the Code with certain of its subsidiaries treated as TRS entities, which are subject to federal and state income taxes.

The following table summarizes the tax status of dividends paid on our common shares:



	Year ended December 31,
(in thousands)	2018	2017	2016
Dividend per share	$2.22	2.10	2.00
Ordinary income	98%	86%	53%
Capital gain	—%	10%	8%
Return of capital	—%	4%	39%
Qualified dividend income	2%	—%	—%
Section 199A dividend	98%	—%	—%

Our consolidated expense (benefit) for income taxes for the years ended December 31, 2018, 2017, and 2016 was as follows:



	Year ended December 31,
(in thousands)	2018			2017		2016
Income tax expense (benefit):
Current	$	5,667		1,168		(153	)
Deferred	(5,145		)	(10,815	)	—
Total income tax expense (benefit)⁽¹⁾	$	522		(9,647	)	(153	)

⁽¹⁾Includes $706,000 and $90,000 of tax expense presented within Other operating expenses during the year ended December 31, 2018 and 2017, respectively. Additionally, $184,000 and $153,000 of tax benefit is presented within Gain on sale of real estate (or Provision for impairment), net of tax, during the years ended December 31, 2018 and 2016, respectively.

The TRS entities are subject to federal and state income taxes and file separate tax returns. Income tax expense (benefit) differed from the amounts computed by applying the U.S. Federal income tax rate to pretax income of the TRS entities, as follows:



	Year ended December 31,
(in thousands)	2018			2017		2016
Computed expected tax expense (benefit)	$	(584	)	1,190		933
State income tax, net of federal benefit	636			108		56
Valuation allowance	(392		)	(1,512	)	(1,239	)
Tax rate change	—			(9,737	)	—
Permanent items	1,067			—		—
All other items	(205		)	304		97
Total income tax expense (benefit)⁽¹⁾	522			(9,647	)	(153	)
Income tax expense (benefit) attributable to operations⁽¹⁾	$	522		(9,647	)	(153	)
⁽¹⁾ Includes $706,000 and $90,000 of tax expense presented within Other operating expenses during the year ended December 31, 2018 and 2017, respectively. Additionally, $184,000 and $153,000 of tax benefit is presented within Gain on sale of real estate (or Provision for impairment), net of tax, during the years ended December 31, 2018 and 2016, respectively.

The tax effects of temporary differences and carryforwards (included in Accounts payable and other liabilities in the accompanying Consolidated Balance Sheets) are summarized as follows:



	December 31,
(in thousands)	2018			2017
Deferred tax assets
Provision for impairment	3,785			3,785
Deferred interest expense	2,617			2,754
Capitalized costs under Section 263A	713			729
Net operating loss carryforward	166			373
Other	2,123			2,297
Deferred tax assets	9,404			9,938
Valuation allowance	(7,907		)	(8,300	)
Deferred tax assets, net	1,497			1,638
Deferred tax liabilities
Straight line rent	(565		)	(528	)
Fixed assets	(14,829		)	(19,757	)
Other	—			(7	)
Deferred tax liabilities	(15,394		)	(20,292	)
Net deferred tax liabilities	$	(13,897	)	(18,654	)

The net deferred tax liability decreased during 2018 primarily due to the sale of properties at the TRS entities. Due to uncertainty regarding the realization of certain deferred tax assets, the Company previously established valuation allowances, primarily in connection with the deferred interest and NOL carryforwards related to certain TRSs. As of December 31, 2018, the minimal projected future taxable income and unpredictable nature of potential property sales with built in losses support the conclusion that it is still more likely than not that some of the deferred tax assets will not be realized.