Quarterly report pursuant to Section 13 or 15(d)

INCOME TAXES

v3.5.0.2
INCOME TAXES
9 Months Ended
Sep. 30, 2016
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES
 
Income tax expense (benefit) consists of the following:
 
 
Three Months Ended September 30,

Nine Months Ended  
 September 30,
 
 
2016

2015

2016

2015
Current:
 
 
 
 
 
 
 
 
Federal
 
$
3,290

 
$
505

 
$
4,561

 
$
1,135

State and Local
 
478

 
(982
)
 
636

 
(2,073
)
Total Current Income Tax Expense (Benefit)
 
3,768

 
(477
)
 
5,197

 
(938
)
Deferred:
 
 
 
 
 
 
 
 
Federal
 
16,375

 
(3,193
)
 
12,575

 
8,764

State and Local
 
757

 
(2,262
)
 
423

 
(2,879
)
Total Deferred Income Tax Expense (Benefit)
 
17,132

 
(5,455
)
 
12,998

 
5,885

Total Income Tax Expense (Benefit)
 
$
20,900

 
$
(5,932
)
 
$
18,195

 
$
4,947


 
New Residential intends to qualify as a REIT for each of its tax years through December 31, 2016. A REIT is generally not subject to U.S. federal corporate income tax on that portion of its income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income to its stockholders by prescribed dates and complies with various other requirements.
 
New Residential operates various securitization vehicles and has made certain investments, particularly its investments in Servicer Advances (Note 6) and REO (Note 8), through taxable REIT subsidiaries (“TRSs”) that are subject to regular corporate income taxes which have been provided for in the provision for income taxes, as applicable. New Residential and its subsidiaries file income tax returns with the U.S. federal government and various state and local jurisdictions beginning with the tax year ending December 31, 2013. Generally, these income tax returns will be subject to tax examinations by tax authorities for a period of three years after the date of filing.

New Residential has recorded a net deferred tax asset of approximately $172.5 million as of September 30, 2016, primarily related to basis differences in all servicer advances held by New Residential’s TRSs and related net operating loss carry forwards.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. As of September 30, 2016, New Residential recorded a partial valuation allowance related to certain net operating losses and loan loss reserves as management does not believe that it is more likely than not that these deferred tax assets will be realized.