Beginning with the 2016 tax year, the Company has qualified 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 distribute at least 90% of its adjusted taxable income to its stockholders. It is management’s current intention to adhere to these requirements and be eligible to be a REIT for the year ended December 31, 2018. As a REIT, the Company generally will not be subject to corporate level federal income tax on taxable income currently distributed to stockholders. If the Company fails to qualify as a REIT for the 2018 tax year, it will be subject to federal and state income taxes at corporate tax rates. Even if the Company qualifies to be taxed as a REIT for 2018, it may be subject to federal and state taxes on any undistributed taxable income. 

 

On December 22, 2017, the TCJA was enacted. The TCJA reduces the statutory federal tax rate from 35.0% to 21.0% effective for tax year 2018 in addition to various other tax law changes that affect the Company.

 

Significant components of the deferred tax assets and liabilities as of December 31, 2018 and 2017, after applying enacted corporate income tax rates, are as follows:

 

 

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has federal and state net operating loss carryforwards of approximately $3,706 which begin expiring in 2033.

 

The Company periodically assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible profits. As a result of this analysis of all available evidence, both positive and negative, the Company concluded that it is not likely that its net deferred tax assets will ultimately be recovered; as such, it recorded a valuation allowance for the net operating losses for calendar year 2018.

 

The Company recognizes in its consolidated financial statements unrecognized tax benefits for uncertain tax positions it has taken or expects to take on a tax return. As of December 31, 2018 and 2017, the Company did not report any unrecognized tax benefits. The Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for the tax years 2015 and earlier. The Company is not currently under examination by any taxing jurisdiction.