NOTE J - INCOME TAX



U.S. and foreign income before income tax expense for the years ended April 30 are as follows:







Income Tax Provision



The income tax provision for the years ended April 30 consists of the following:









NOTE J - INCOME TAX - Continued



Income Tax Provision - Continued



The difference between the income tax provision and the amounts computed by applying the statutory Federal income tax rates to income before tax expense for the years ended April 30 are as follows:













NOTE J - INCOME TAX - Continued



Deferred Tax Assets and Liabilities



Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of the deferred tax assets for federal and state income taxes are as follows:







The Company has state net operating loss carry-forwards totaling approximately $336,000 at April 30, 2017, that will begin to expire in fiscal year April 30, 2025. The Company recognizes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. The Company determined it is more likely than not that it will realize the deferred tax assets due to the reversal of deferred tax liabilities. The state deferred tax liabilities exceed the state deferred tax assets and based on the reversing pattern the Company has concluded that all of the state deferred tax liabilities are expected to reverse within the period of time available to fully utilize all state deferred tax assets.  Therefore, the Company has concluded that a valuation allowance is not required as of April 30, 2017, related to state net operating loss carryforwards.  The Company has established a valuation allowance of $78,100 related to its foreign tax credit carry-forward.  The Company’s estimate of cumulative taxable income



NOTE J - INCOME TAX - Continued



Deferred Tax Assets and Liabilities - Continued



during the foreign tax credit carryforward period is insufficient to support that the tax benefit from the foreign tax credit is more likely than not to be realized.



The Company has not recorded U.S. income taxes on the undistributed earnings of the Company’s foreign subsidiaries. Such earnings are considered to be indefinitely invested in the foreign subsidiaries.  If such earnings were repatriated, additional tax expense may result.  The cumulative amount of unremitted earnings for which U.S. income taxes have not been recorded is $10,672,000 as of April 30, 2017.  The amount of U.S. income taxes on these earnings is impractical to compute due to the complexities of the hypothetical calculation.

 

Unrecognized Tax Benefits



The Company has not identified any uncertain tax positions or expects any to be taken in the Company’s tax returns.  For the fiscal year ended April 30, 2017 and 2016, the amount of consolidated worldwide liability for uncertain tax positions that impacted the Company’s effective tax rate was $0 for each year.



Other



Interest and penalties related to tax positions taken in the Company’s tax returns are recorded in income tax expense and miscellaneous selling, general and administrative expense, respectively, in the Consolidated Statements of Income.  For the fiscal year ended April 30, 2017 and 2016, the amount included in the Company’s balance sheet for such liabilities was $0 for each year. 



The Company is subject to taxation in the U.S. and various state and foreign jurisdictions.  With few exceptions, the Company is no longer subject to state, local or foreign examinations by tax authorities for tax years before fiscal year 2014.  The Internal Revenue Service previously concluded an audit of the Company’s fiscal year 2013 tax return, and a no change letter was issued.