9. Income Taxes

         Income tax expense (benefit) for fiscal 2017, 2016, and 2015 consists of the following:

                                                                                                                                                                                    

         Total income tax expense (benefit) from continuing operations differed from the amount computed by applying the federal statutory rate of 35% for fiscal 2017, 2016, and 2015 due to the following:

                                                                                                                                                                                    

         Income taxes for financial reporting purposes differ from the amount computed by applying the statutory federal rate primarily due to the effect of state income taxes, net of federal benefit, permanent differences, the change in the valuation allowance related to certain state net operating losses, and the 338(h)(10) election. In fiscal 2017 the Company made an election under Section 338 (h)(10) of the Internal Revenue Code which effectively changed the tax treatment of the Company's acquisition of Gypsum Supply Company from a stock transaction to an asset transaction for tax purposes. As a result of this election, the Company decreased its deferred tax liabilities and tax expense by $6,936.

         The tax effects of temporary differences, which give rise to deferred income taxes as of April 30, 2017 and 2016 are as follows:

                                                                                                                                                                                    

         In fiscal 2017, 2016, and 2015, the Company generated certain state net operating loss carry-forwards which are available for use against taxable income in each respective state. The Company had state net operating losses available for carry-forward of $21,116 and $20,228 in fiscal 2017 and 2016, respectively, which expire through the fiscal year ending in 2037.

         Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary differences and other tax attributes, such as net operating loss carry-forwards. In assessing if the deferred tax assets will be realized, the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible temporary differences reverse. As of April 30, 2017, except as noted in the following paragraph, the Company believes that it is more likely than not that all of its deferred tax assets relating to separate company state return filings will be realized. The tax credits, carryforwards and net operating losses expire from 2018 to 2037.

         Management makes an assessment to determine if its deferred tax assets are more likely than not to be realized. Valuation allowances are established in the event that management believes that it is more likely than not the related tax benefits will not be realized. The valuation allowance as of April 30, 2017 and 2016 was $297 and $83, respectively, and primarily relates to state net operating loss carry forwards. During fiscal 2017, the valuation allowance increased by $214 due to additional NOL carryforwards. From the year ended April 30, 2015 to the year ended April 30, 2016 the valuation allowance decreased by $60.

         The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. The Company's policy for recording penalties and interest related tax items in "Selling, general and administrative" expense.

         At April 30, 2017, the tax years ended April 30, 2017, 2016, 2015, and 2014 and the tax period ended March 31, 2014 remain subject to examination by the U.S. Internal Revenue Service. In states in which the Company conducts business, the statute of limitation periods for examination generally vary from three to four years. Certain years from which net operating losses are still being carried forward remain subject to examination by the taxing authorities. The Company regularly assesses the potential outcomes of future examinations to ensure the Company's provision for income taxes is sufficient. The Company recognizes liabilities based on estimates of whether additional taxes will be due and believes that no liability for uncertain tax position is necessary as of April 30, 2017 and 2016.