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, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

15. INCOME TAXES

The provision for income taxes (including discontinued operations) consists of the following:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014(A)			2013
Current:
Federal	$	129	$	—	$	718		$	—
State and Local	29		—		194			—
Total Current Provision	$	158	$	—	$	912		$	—

Deferred:
Federal	$	155	$	—	$	(159	)	$	—
State and Local	21		—		(499		)	—
Total Deferred Provision	$	176	$	—	$	(658	)	$	—

Total Provision for Income Taxes	$	334	$	—	$	254		$	—


(A)	The provision for income taxes for the nine months ended September 30, 2014 includes $0.9 million income tax benefit from New Media that is included in income (loss) from discontinued operations on the consolidated statement of income.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets as of September 30, 2014 and December 31, 2013 are presented below:



	September 30, 2014			December 31, 2013
Deferred tax assets:
Allowance for loan losses	$	1,599		$	2,076
Depreciation and amortization	37,425			94,880
Leaseholds	7,512			6,489
Accrued expenses	15,292			23,816
Deposits	7,787			7,787
Net operating losses	53,135			211,560
Other	837			17,036
Total deferred tax assets	123,587			363,644
Less valuation allowance	(123,392		)	(363,192		)
Net deferred tax assets(A)	$	195		$	452
Deferred tax liabilities:
Other	—			—
Total deferred tax liabilities	$	—		$	—


(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 had recorded a valuation allowance against a significant portion of its deferred tax assets as of September 30, 2014 as management does not believe that it is more likely than not that the deferred tax assets will be realized.

During the period ended September 30, 2014, the valuation allowance decreased by $239.8 million primarily related to the spin-off of New Media.

The following table summarizes the change in the deferred tax asset valuation allowance:



Valuation allowance at December 31, 2013	$	363,192
Decrease due to spin-off of New Media	(244,401		)
Other increase	4,601
Valuation allowance at September 30, 2014	$	123,392

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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