TWO Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

The following table summarizes the tax (benefit) provision recorded at the taxable subsidiary level for the years ended December 31, 2012, 2011 and 2010:



	Year Ended December 31,
(in thousands)	2012			2011			2010
Current tax (benefit) provision:
Federal	$	(4,586	)	$	4,731		$	(6	)
State	3			—			—
Total current tax (benefit) provision	(4,583		)	4,731			(6		)
Deferred tax benefit	(37,636		)	(5,837		)	(677		)
Total benefit from income taxes	$	(42,219	)	$	(1,106	)	$	(683	)

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

The following is a reconciliation of the statutory federal and state rates to the effective rates, for the years ended December 31, 2012, 2011 and 2010:



	Year Ended December 31,
	2012					2011					2010
(dollars in thousands)	Amount			Percent		Amount			Percent		Amount			Percent
Computed income tax expense at federal rate	$	84,894		34	%	$	42,951		34	%	$	11,924		34	%
State taxes, net of federal benefit, if applicable	2			—	%	—			—	%	—			—	%
Permanent differences in taxable income from GAAP income	118			—	%	2,731			2	%	(5		)	—	%
Dividends paid deduction	(127,233		)	(51	)%	(46,788		)	(37	)%	(12,602		)	(36	)%
Benefit from income taxes/Effective Tax Rate⁽¹⁾	$	(42,219	)	(17	)%	$	(1,106	)	(1	)%	$	(683	)	(2	)%

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(1)	The benefit from income taxes is recorded at the taxable subsidiary level.

Schedule of Current and Deferred Tax Assets and Liabilities [Table Text Block]

The Company's consolidated balance sheet, as of December 31, 2012 and December 31, 2011, contains the following current and deferred tax assets and liabilities, which are included in other assets and are recorded at the taxable subsidiary level:



(in thousands)	December 31, 2012			December 31, 2011
Current tax
Federal income tax payable	$	—		$	(3,898	)
Current income taxes receivable	4,323			157
State and local income tax payable	—			—
Current tax receivable (payable), net	4,323			(3,741		)
Deferred tax assets (liabilities)
Deferred tax asset	46,727			9,710
Deferred tax liability	(2,543		)	(3,319		)
Deferred tax asset, net	44,184			6,391
Total tax assets and liabilities, net	$	48,507		$	2,650

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

Components of the Company's deferred tax assets and liabilities as of December 31, 2012 and December 31, 2011 are as follows:



(in thousands)	December 31, 2012			December 31, 2011
Unrealized loss on derivative assets	$	13,505		$	7,429
Unrealized gain on trading securities and mortgage loans held-for-sale	(1,972		)	(1,038		)
Capitalized start-up and organizational costs	148			—
Net operating loss carryforward	17,931			—
Capital loss carryforward	14,572			—
Total net deferred tax assets	$	44,184		$	6,391