Entity information:
(13)
INCOME TAXES:
 
The provision (benefit) for income taxes consists of the following:
 
 
 
Year Ended April 30,
 
 
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
Current:
 
 
 
 
 
 
 
Federal
 
$
347
 
$
(35)
 
State and local
 
 
26
 
 
126
 
 
 
 
373
 
 
91
 
Deferred:
 
 
 
 
 
 
 
Federal
 
 
(32)
 
 
(5,074)
 
State and local
 
 
656
 
 
(228)
 
 
 
 
624
 
 
(5,302)
 
Total provision (benefit) for income taxes
 
$
997
 
$
(5,211)
 
 
The components of the net deferred income taxes are as follows:
 
 
 
April 30,
 
 
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
Deferred income tax assets:
 
 
 
 
 
 
 
State tax loss carryforwards
 
$
4,199
 
$
4,591
 
Accrued pension costs
 
 
3,594
 
 
4,716
 
Vacation accrual
 
 
154
 
 
161
 
Intangibles and deductible goodwill
 
 
4,561
 
 
5,597
 
Real estate basis differences
 
 
6,439
 
 
6,802
 
Other
 
 
-
 
 
34
 
Total deferred income tax assets
 
 
18,947
 
 
21,901
 
 
 
 
 
 
 
 
 
Deferred income tax liabilities:
 
 
 
 
 
 
 
Depreciable assets
 
 
(1,112)
 
 
(2,074)
 
Deferred gains on investment assets
 
 
(3,442)
 
 
(3,661)
 
Capitalized costs for financial reporting purposes, expensed for tax
 
 
(216)
 
 
(316)
 
Other
 
 
(22)
 
 
-
 
Total deferred income tax liabilities
 
 
(4,792)
 
 
(6,051)
 
Valuation allowance for realization of certain deferred income tax assets
 
 
(4,636)
 
 
(4,567)
 
Net deferred income tax asset
 
$
9,519
 
$
11,283
 
 
A valuation allowance is provided when it is considered more likely than not that certain deferred tax assets will not be realized. The valuation allowance of $4,636,000 as of April 30, 2017 relates primarily to net operating loss carryforwards in states where the Company either has no current operations or its operations are not considered likely to use the net operating loss carryforward prior to its expected expiration date. The use and elimination of certain state operating loss carryforwards which were wholly or partially reserved with a valuation allowance results in a significant deferred state income tax provision in 2017 and is further reflected in the state income taxes, net of federal income tax effect, in the rate reconciliation table shown below.
 
The Company’s remaining state net operating loss carryforwards expire beginning in the fiscal years ending April 30, 2020 through April 30, 2036. The state net operating loss carryforwards of $84,943,000 expire in future fiscal years as follows: 2018 - $0; 2019 - $0; 2020 - $2,003,000; 2021 - $550,000; 2022 - $32,000; and thereafter - $82,358,000.
 
In both 2017 and 2016, the Company revised the tax rate on existing temporary differences due to changes in the tax rates and state apportionments. The effect of the rate change is included in the Deferred tax rate changes and other amount in the rate reconciliation below.
 
The following table reconciles taxes computed at the U.S. federal statutory income tax rate from continuing operations to the Company’s actual tax provision:
 
 
 
Year Ended April 30,
 
 
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
Computed tax provision (benefit) at statutory rate
 
$
333
 
$
(5,248)
 
Increase (reduction) in tax resulting from:
 
 
 
 
 
 
 
State income taxes, net of federal income tax effect
 
 
473
 
 
(93)
 
Meals and entertainment
 
 
4
 
 
3
 
Deferred tax rate changes and other
 
 
187
 
 
127
 
Actual tax provision (benefit)
 
$
997
 
$
(5,211)
 
 
The Company is subject to U.S. federal income taxes, and also to various state and local income taxes. Tax regulations within each jurisdiction are subject to interpretation and require significant judgment to apply. The Company is not currently under examination by any tax authorities with respect to its income tax returns. Other than the U.S. federal tax return, in nearly all jurisdictions, the tax years through the fiscal year ended April 30, 2013 are no longer subject to examination due to the expiration of the statute of limitations.
 
ASC 740-10 clarifies the accounting for uncertain tax positions, prescribing a minimum recognition threshold a tax position is required to meet before being recognized, and providing guidance on the derecognition, measurement, classification and disclosure relating to income taxes. The following table summarizes the beginning and ending gross amount of unrecognized tax benefits:
 
 
 
2017
 
2016
 
 
 
(in thousands)
 
Gross unrecognized tax benefits at beginning of year
 
$
58
 
$
58
 
Gross increases:
 
 
 
 
 
 
 
Additions based on tax positions related to current year
 
 
-
 
 
-
 
Additions based on tax positions of prior years
 
 
-
 
 
-
 
Gross decreases:
 
 
 
 
 
 
 
Reductions based on tax positions of prior years
 
 
-
 
 
-
 
Reductions based on the lapse of the applicable statute of limitations
 
 
-
 
 
-
 
Gross unrecognized tax benefits at end of year
 
$
58
 
$
58
 
 
The total tax effect of gross unrecognized tax benefits at April 30, 2017 and 2016 was $58,000 as of each date which, if recognized, would have an impact on the effective tax rate. The Company believes it is reasonably possible that the liability for unrecognized tax benefits will not change in the next twelve months.
 
The Company has elected to include interest and penalties in its income tax expense. The Company has $50,000 accrued in the accompanying financial statements for interest or penalties at April 30, 2017 and no accrual at April 30, 2016.