v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

12. Income Taxes

The Company has elected to be treated as a REIT under the provision of the Internal Revenue Code, which requires that it distribute at least 90% of its taxable income annually to our stockholders and comply with certain other organizational and operating requirements. As a REIT, the Company is generally not subject to federal corporate income tax on the portion of its taxable income that is paid to stockholders within the same tax year. However, as a REIT, the Company is still subject to certain state and local taxes

on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, its taxable REIT subsidiaries are subject to federal, state and local taxes.

For income tax purposes, dividends paid on the Company’s preferred stock were 100.0% taxable as ordinary non-qualified income.

The components of the income tax expense (benefit) for the years ended December 31, 2025, 2024, and 2023 are as follows:

 

 

 

Year Ended

 

 

Year Ended

 

 

Year Ended

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

—

 

 

$

—

 

 

$

—

 

State

 

 

50,120

 

 

 

132,491

 

 

 

(304,947

)

 

 

50,120

 

 

 

132,491

 

 

 

(304,947

)

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

(194,932

)

 

 

(1,109,938

)

 

 

(1,559,177

)

State

 

 

8,146

 

 

 

(210,919

)

 

 

(254,558

)

Subtotals

 

 

(186,786

)

 

 

(1,320,857

)

 

 

(1,813,735

)

Change in deferred tax valuation allowance

 

 

186,786

 

 

 

1,320,857

 

 

 

1,813,735

 

 

 

 

—

 

 

 

—

 

 

 

—

 

Income tax expense (benefit)

 

$

50,120

 

 

$

132,491

 

 

$

(304,947

)

 

A reconciliation of the U.S. statutory federal income tax expense (benefit) to the Company’s provision for income tax is as follows:

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

December 31, 2025

Statutory federal income tax expense (benefit)

 

$

(1,623,092

)

 

 

21.0

 

%

Nontaxable and nondeductible items

 

 

 

 

 

 

 

Federal tax impact of REIT election

 

 

1,433,531

 

 

 

(18.6

)

%

Federal impact of PPP loan forgiveness

 

 

—

 

 

 

—

 

%

State income taxes, net of federal income tax effect (1)

 

 

52,895

 

 

 

(0.7

)

%

Change in valuation allowance

 

 

186,786

 

 

 

(2.4

)

%

Income tax expense (benefit)

 

$

50,120

 

 

 

(0.7

)

%

 

 

 

 

 

 

 

 

(1) For the year ended December, 31 2025 , state and local income taxes in Texas comprise the majority

(greater than 50 percent) of the tax effect in this category.

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

Year Ended

 

 

 

December 31, 2024

 

 

December 31, 2023

 

Statutory federal income tax expense

 

$

275,593

 

 

$

736,001

 

Federal tax impact of REIT election

 

 

(1,357,871

)

 

 

(2,231,835

)

Statutory federal income tax expense (benefit) at TRS

 

 

(1,082,278

)

 

 

(1,495,834

)

Federal impact of PPP loan forgiveness

 

 

—

 

 

 

(56,470

)

State income tax benefit, net of federal expense (benefit)

 

 

(106,088

)

 

 

(566,378

)

Change in valuation allowance

 

 

1,320,857

 

 

 

1,813,735

 

Income tax expense (benefit)

 

$

132,491

 

 

$

(304,947

)

 

The Company paid income taxes as follows:

 

 

 

Year Ended

 

 

 

December 31, 2025

 

 

 

 

 

U.S. federal

 

$

—

 

U.S. state and local

 

 

 

Maryland

 

 

38,712

 

Pennsylvania

 

 

60,691

 

Texas

 

 

43,886

 

Other

 

 

75

 

Total U.S. state and local

 

 

143,364

 

Total income taxes paid, net of refunds

 

$

143,364

 

Deferred income taxes are recognized for temporary differences between the financial reporting bases of asset and liabilities and their respective tax bases and for operating losses and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realizable based on consideration of available evidence, including future reversal of taxable temporary differences, projected taxable income and tax planning strategies.

Due to the uncertainty of realizing the loss in future years attributable to the changes in travel demand and market conditions in various markets in which the Company does business and the effectiveness of the Company’s tax planning strategies, as of December 31, 2025, the Company believes it is more likely than not that the Company will not realize the benefits of these assets. Therefore, the Company has determined that a full valuation allowance should be recorded against the deferred tax asset. The amount of the deferred tax assets considered unrealizable, however, could change in the future based on revised estimates of future taxable income during the carryforward period.

The significant components of our deferred tax asset as of December 31, 2025 and 2024, are as follows:

 

 

 

Year Ended

 

 

Year Ended

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

 

 

 

 

 

 

Deferred tax asset:

 

 

 

 

 

 

Net operating loss carryforwards

 

$

13,321,350

 

 

$

13,247,852

 

Accrued compensation

 

 

123,117

 

 

 

549,538

 

Accrued expenses and other

 

 

1,056,700

 

 

 

516,991

 

 

 

 

14,501,167

 

 

 

14,314,381

 

Less: Valuation allowance

 

 

(14,501,167

)

 

 

(14,314,381

)

     Total

 

$

—

 

 

$

—