Two Harbors Investment Corp. Quarterly report pursuant to Section 13 or 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

3 Months Ended

Mar. 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 three months ended March 31, 2012 and 2011:



	Three Months Ended March 31,
(in thousands)	2012			2011
Current tax (benefit) provision:
Federal	$	(8,375	)	$	270
State	2			—
Total current tax (benefit) provision	(8,373		)	270
Deferred tax provision	796			487
Total (benefit from) provision for income taxes	$	(7,577	)	$	757

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 three months ended March 31, 2012 and 2011:



	Three Months Ended March 31,
	2012					2011
(dollars in thousands)	Amount			Percent		Amount			Percent
Computed income tax expense at federal rate	$	15,036		34	%	$	7,866		34	%
State taxes, net of federal benefit, if applicable	2			—	%	—			—	%
Permanent differences in taxable income from GAAP income (loss)	15			—	%	1			—	%
Dividends paid deduction	(22,630		)	(51	)%	(7,110		)	(31	)%
(Benefit from) provision for income taxes/Effective Tax Rate⁽¹⁾	$	(7,577	)	(17	)%	$	757		3	%

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

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



(in thousands)	March 31, 2012			December 31, 2011
Current tax
Federal income tax payable	$	—		$	(3,898	)
Current taxes receivable	8,109			157
State and local income tax payable	—			—
Current tax receivable (payable), net	8,109			(3,741		)
Deferred tax assets (liabilities)
Deferred tax asset	6,425			9,710
Deferred tax liability	(672		)	(3,319		)
Deferred tax asset, net	5,753			6,391
Total tax assets and liabilities, net	$	13,862		$	2,650

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

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



(in thousands)	March 31, 2012			December 31, 2011
Unrealized loss on derivative assets	$	6,200		$	7,429
Unrealized gain on trading securities and mortgage loans held-for-sale	(624		)	(1,038		)
Capitalized start-up and organizational costs	177			—
Total net deferred tax assets	$	5,753		$	6,391