Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Components of Income Tax Expense (Benefit)

The components of our provision for (benefit from) income taxes for the periods presented are as follows (in thousands):


	Years Ended December 31,
	2021		2020		2019
Federal
Current	$	114	$	(8,165)	$	1,415
Deferred	1,985		581		1,168
	2,099		(7,584)		2,583

State and Local
Current	2,687		180		427
Deferred	(1,233)		(526)		142
	1,454		(346)		569
Total Provision (Benefit)	$	3,553	$	(7,930)	$	3,152

Schedule of Deferred Tax Assets and Liabilities

Deferred income taxes as of December 31, 2021 and 2020 consist of the following (in thousands):


	December 31,
	2021		2020
Deferred Tax Assets
Net operating loss carryforwards	$	48,801	$	40,224
Accrued vacation payable and deferred rent	9,533		9,369
Interest expense limitation	2,116		1,286
Deferred revenue — key money	1,217		1,128
Operating lease liabilities	1,109		1,329
Gift card liability	184		531
Other	—		—
Total deferred income taxes	62,960		53,867
Valuation allowance	(53,301)		(42,047)
Total deferred tax assets	9,659		11,820
Deferred Tax Liabilities
Villa rental management agreement	(7,140)		(6,967)
Fixed assets and intangibles	(2,103)		(4,676)
Operating lease ROU assets	(1,062)		(1,244)
Business interruption insurance proceeds	(559)		(555)
Other	(276)		—
Deferred rent	(10)		—
Total deferred tax liabilities	(11,150)		(13,442)
Net Deferred Tax Liability	$	(1,491)	$	(1,622)

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the provision for income taxes with the amount computed by applying the statutory federal income tax rate to income before provision for income taxes for the periods presented is as follows (dollars in thousands):


	Years Ended December 31,
	2021		2020		2019
Pre-tax (loss) income from taxable subsidiaries	$	(31,387)	$	(139,598)	$	6,674

Federal provision at statutory tax rate (a)	$	(6,591)	$	(29,315)	$	1,402
Valuation allowance	11,673		22,726		2,418
Income not subject to federal tax	(3,319)		3,152		210
State and local taxes, net of federal provision	1,454		(6,207)		(122)
Return to provision true-up	965		1,731		(469)
Rate change	(436)		2,438		—
Other	(219)		(472)		(1)
Non-deductible expenses	26		25		81
Tax benefit net operating loss carryback	—		(2,008)		—
Tax credit	—		—		(367)
Total provision (benefit)	$	3,553	$	(7,930)	$	3,152

___________

(a)The applicable statutory tax rate was 21% for the years ended December 31, 2021, 2020 and 2019.

Watermark Lodging Trust, Inc. 10-K