Creative Media & Community Trust CorpCMCT

Creative Media & Community Trust Corp Income Taxes Disclosure

10-KFiled Mar 10, 20263 min read
17. INCOME TAXES
The Company has elected to be taxed as a REIT under the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that the Company distributes at least 90% of its taxable income to its stockholders. As a REIT, the Company generally will not be subject to corporate level federal income tax on net income that is currently distributed to stockholders.
The Company has wholly owned TRS’s which are subject to federal and state income taxes. The income generated from the TRS’s is taxed at normal corporate rates.
The provision for income taxes results in effective tax rates that differ from federal and state statutory rates. A reconciliation of the provision for income tax attributable to the TRSs’ income from continuing operations computed at federal statutory rates to the income tax provision reported in the financial statements is as follows:
Year Ended December 31,
20252024
(in thousands)
Income from continuing operations before income taxes for TRSs$(27)$3,742 
Expected federal income tax provision$(6)$785 
State income taxes (1)
(55)1 
Investment Tax Credits
(183)— 
Change in valuation allowance425 151 
Other316 (139)
Income tax provision$497 $798 
(1) State taxes in California made up the majority (greater than 50%) of the tax effect in this category.
The components of the Company’s net deferred tax asset, which are included in other assets, are as follows:
Year Ended December 31,
20252024
(in thousands)
Deferred tax assets:
   Net operating losses$622 $196 
   Secured borrowings—government guaranteed loans4 5 
   Other422 286 
     Total gross deferred tax assets1,048 487 
   Valuation allowance(630)(205)
418 282 
Deferred tax liabilities:
     Loans receivable— — 
— — 
     Deferred tax asset, net$418 $282 
The net operating loss carryforwards as of December 31, 2025 and 2024 were generated by TRSs and are available to offset future taxable income of these TRSs. The increase in the valuation allowance recorded in 2025 was $425,000.

Income taxes paid (net of refunds) for the years ended December 31, 2025 and 2024 are as follows:
Year Ended December 31,
20252024
(in thousands)
Federal$66 $845 
State and Local2 2 
Income tax provision$68 $847 
The periods subject to examination for the Company’s federal and state income tax returns are 2022 through 2025. As of December 31, 2025 and 2024, no reserves for uncertain tax positions have been established and the Company does not anticipate any material changes in the amount of unrecognized tax benefits recorded to occur within the next 12 months.
The Tax Cuts and Jobs Act of 2017, signed into law in late December 2017, made sweeping changes to provisions of the Code applicable to businesses. The CARES Act, signed into law in March 2020, made additional changes to provisions on the Code applicable to businesses. The Inflation Reduction Act, signed into law in August 2022 also made changes to the Code applicable to businesses. The One Big Beautiful Bill, signed into law in July 2025 also made changes to the Code applicable to businesses. Management has reviewed these statutory changes and determined that the impact to the Company’s consolidated financial statements is not material.

Historical Timeline

Fiscal YearFiled
2025Mar 10, 2026Showing above
2024Mar 7, 2025
2023Mar 29, 2024
2022Mar 31, 2023
2021Mar 16, 2022
2020Mar 16, 2021
2019Mar 16, 2020
2018Mar 18, 2019
2017Mar 12, 2018
2016Mar 16, 2017
2015Mar 15, 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

RevenueEarnings Per ShareFair ValuePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsStock CompensationNew Standards