Drive Shack Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

INCOME TAXES

INCOME TAXES

9 Months Ended

Sep. 30, 2016

The provision for income taxes consists of the following:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016		2015
Current:
Federal	$	(37	)	$	996		$	27	$	1,076
State and Local	(1		)	269			20		289
Total Current Provision (Benefit)	$	(38	)	$	1,265		$	47	$	1,365
Deferred:
Federal	$	—		$	(7	)	$	83	$	(30	)
State and Local	—			(1		)	14		(5		)
Total Deferred Provision (Benefit)	$	—		$	(8	)	$	97	$	(35	)

Total Provision (Benefit) for Income Taxes	$	(38	)	$	1,257		$	144	$	1,330

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of September 30, 2016 are presented below:



	September 30, 2016			December 31, 2015
Deferred tax assets:
Allowance for loan losses	$	380		$	399
Depreciation and amortization	35,587			33,495
Accrued expenses	2,184			2,008
Net operating losses	29,690			22,524
Total deferred tax assets	67,841			58,426
Less valuation allowance	(52,928		)	(42,158		)
Net deferred tax assets	$	14,913		$	16,268
Deferred tax liabilities:
Leaseholds	14,125			15,366
Other	788			805
Total deferred tax liabilities	$	14,913		$	16,171
Net deferred income tax assets (A)	$	—		$	97


(A)	Recorded in receivables and other assets on the Consolidated Balance Sheets.

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.

Newcastle recorded a valuation allowance against its deferred tax assets as of September 30, 2016 as management does not believe that it is more likely than not that the deferred tax assets will be realized.