Piedmont Realty Trust, Inc.PDM

Piedmont Realty Trust, Inc. Income Taxes Disclosure

10-KFiled Feb 17, 20262 min read
Income Taxes
Piedmont’s income tax basis net income/(loss) for the years ended December 31, 2025, 2024, and 2023, is calculated as follows (in thousands):

202520242023
GAAP basis financial statement net loss$(83,620)$(79,069)$(48,387)
Increase/(decrease) in net loss resulting from:
Depreciation and amortization expense recognized for financial reporting purposes in excess of amounts recognized for income tax purposes
73,859 80,822 93,791 
Rental income accrued for income tax purposes less than amounts for financial reporting purposes
(34,377)(23,049)(18,817)
Net amortization of above/below-market lease intangibles for income tax purposes in excess of amounts for financial reporting purposes
(7,503)(9,266)(12,049)
Gain on disposal of property for financial reporting purposes in excess of amounts for income tax purposes
(20,862)(20,087)— 
Taxable income of Piedmont Washington Properties, Inc., in excess of amount for financial reporting purposes
4,184 4,771 6,212 
Other expenses, including impairment charges, for financial reporting purposes in excess of amounts for income tax purposes
8,270 42,606 40,173 
Taxable income for POH in excess of amount for financial reporting purposes
14 49 61 
Income tax basis net income/(loss), prior to dividends paid deduction$(60,035)$(3,223)$60,984 

For income tax purposes, dividends to common stockholders are characterized as ordinary income, capital gains, or as a return of a stockholder’s invested capital. The composition of Piedmont’s distributions per common share is presented below:

202520242023
Ordinary income— %— %63.22 %
Return of capital100 %100 %34.69 %
Capital gains— %— %2.09 %
100 %100 %100 %

Piedmont elected to be taxed as a REIT under the Code. As a REIT, Piedmont is generally not subject to federal income taxes on distributed taxable income, provided it meets certain regulatory requirements. For the three years ended December 31, 2025 presented in its consolidated financial statements, Piedmont distributed 100% of its REIT taxable income and accordingly recognized no material federal income tax expense.
Piedmont’s income tax expense relates primarily to immaterial amounts incurred by its TRS and state and local franchise taxes. Management has evaluated the disclosure requirements under the FASB's Accounting Standards Update 2023-09, “Improvements to Income Tax Disclosures,” and believes the disclosures herein consider the materiality and nature of Piedmont’s tax position. Supporting schedules, including detailed rate reconciliations, are maintained by management and may be provided if materiality increases in future periods. Furthermore, Piedmont had no uncertain tax positions as of December 31, 2025 or 2024.

Historical Timeline

Fiscal YearFiled
2025Feb 17, 2026Showing above
2015Feb 17, 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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