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, 2015

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



	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Current:
Federal	$	996		$	129	$	1,076		$	718
State and Local	269			29		289			194
Total Current Provision	$	1,265		$	158	$	1,365		$	912
Deferred:
Federal	$	(7	)	$	155	$	(30	)	$	(159	)
State and Local	(1		)	21		(5		)	(499		)
Total Deferred Provision	$	(8	)	$	176	$	(35	)	$	(658	)

Total Provision for Income Taxes	$	1,257		$	334	$	1,330		$	254
Provision for income taxes from continuing operations	$	1,257		$	—	$	1,330		$	144
Provision for income taxes from discontinued operations	$	—		$	334	$	—		$	110

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, 2015 are presented below:



	September 30, 2015			December 31, 2014
Deferred tax assets:
Allowance for loan losses	$	397		$	366
Depreciation and amortization	32,593			13,938
Accrued expenses	1,660			2,006
Net operating losses	21,289			26,543
Other	159			2,365
Total deferred tax assets	56,098			45,218
Less valuation allowance	(39,908		)	(27,434		)
Net deferred tax assets	$	16,190		$	17,784
Deferred tax liabilities:
Leaseholds	16,111			17,741
Total deferred tax liabilities	$	16,111		$	17,741
Net deferred income tax assets (A)	$	79		$	43


(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, 2015 as management does not believe that it is more likely than not that the deferred tax assets will be realized.