v3.26.1
Income Taxes
 3 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
To qualify as a REIT for federal income tax purposes, at least 90% of taxable income (excluding 100% of net capital gains) must be distributed to stockholders. REITs that do not distribute a certain amount of taxable income in the current year are also subject to a 4% federal excise tax. Undistributed net income for federal income tax purposes differs from undistributed net income for GAAP purposes primarily due to the recognition of straight-line rent revenue, determining the basis of acquired assets, recording of impairments, the useful life and depreciation and amortization methods for real property and the provision for loan losses for financial reporting purposes versus bad debt expense for federal income tax purposes.
For the three months ended March 31, 2026, the Company’s taxable REIT subsidiary ("TRS") recognized a de minimis provision for federal and state income tax, which would be presented in other expenses on the Company’s unaudited Condensed Consolidated Statements of Operations.
The table below presents the effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities as of March 31, 2026:
March 31, 2026
Deferred Tax Assets:
Net Operating Loss Carryforwards$964 
Investment in LLCs165
Basis in REO Assets206
Total Gross Deferred Tax Assets1,335 
Less: Valuation Allowance(1,227)
Net Deferred Tax Assets108
Deferred Tax Liabilities:
Depreciation(67)
Prepaid Expenses(13)
Amortization(28)
Total Deferred Tax Liabilities(108)
Total Deferred Tax Assets/(Liabilities)$— 
At March 31, 2026, the Company’s TRS had federal net operating loss carryforwards of approximately $4.3 million. These losses were generated after 2017 and therefore may be carried forward indefinitely but may be used to offset only 80% of taxable income in any given year.
The Company evaluates the realizability of deferred tax assets based on available evidence, including the history of taxable income and projected future taxable income of the TRS.
Because the TRS has generated cumulative losses in recent years and uncertainty exists regarding the timing of future taxable income, management concluded that it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company recorded a valuation allowance against substantially all deferred tax assets at March 31, 2026.
The income tax provision for the Company differs from the amount computed from applying the statutory federal income tax rate to income before income taxes due to non-taxable REIT income and other permanent differences including the non-deductibility of acquisition costs of business combinations for federal income tax reporting.
The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying unaudited condensed consolidated financial statements as of March 31, 2026.