American Assets Trust, Inc.AAT

American Assets Trust, Inc. Income Taxes Disclosure

10-KFiled Feb 6, 20262 min read
INCOME TAXES
We elected to be taxed as a REIT and operate in a manner that allows us to qualify as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2011. As a REIT, we are generally not subject to corporate level income tax on the earnings distributed currently to our stockholders. Our Operating Partnership is subject to state and local income taxes and our TRS is subject to federal and state income taxes.
We lease our hotel property to a wholly owned TRS that is subject to federal and state income taxes. We account for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between GAAP carrying amounts and their respective tax bases. Additionally, we classify certain state taxes as income taxes for financial reporting purposes in accordance with ASC Topic 740, Income Taxes.
A deferred tax asset is included in our consolidated balance sheets of $1.0 million and $1.0 million, and a deferred tax liability is included in our consolidated balance sheets of $0.6 million and $0.8 million as of December 31, 2025 and 2024, respectively, in relation to real estate asset basis differences and prepaid expenses for our TRS.
The income tax provision included in other income (expense) on the consolidated statement of comprehensive income is as follows (in thousands):
Year Ended December 31,
202520242023
Current:
Federal$15 $31 $86 
State931 962 1,191 
Deferred:
Federal(31)— (21)
State(145)(107)(215)
Provision for income taxes$770 $886 $1,041 

Historical Timeline

Fiscal YearFiled
2025Feb 6, 2026Showing above
2024Feb 12, 2025
2023Feb 14, 2024
2022Feb 10, 2023
2021Feb 11, 2022
2020Feb 16, 2021
2019Feb 14, 2020
2018Feb 15, 2019
2017Feb 16, 2018
2016Feb 17, 2017
2015Feb 19, 2016

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

Other Available Disclosures

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