NOTE 14 - INCOME TAXES

 

The Company and Portsmouth file separate tax returns for both federal and state purposes. The provision for income tax expense consists of the following:

 

For the years ended June 30,		2017			2016
Federal
Current tax expense		$	(35,000)		$	(26,000)
Deferred tax benefit			(82,000)			2,362,000
			(117,000)			2,336,000
State
Current tax expense			1,000			(14,000)
Deferred tax benefit			(80,000)			375,000
			(79,000)			361,000
Total income tax (expense) benefit		$	(196,000)		$	2,697,000

 

A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows:

 

For the years ended June 30,		2017			2016
Statutory federal tax rate			34.0	%		34.0	%
State income taxes, net of federal tax benefit			6.8	%		3.4	%
Noncontrolling interest			0.0	%		-1.2	%
Valuation allowance			-56.4	%		-5.2	%
Other			-5.9	%		-2.6	%
			-21.5	%		28.4	%

The components of the Company’s deferred tax assets and (liabilities) as of June 30, 2017 and 2016 are as follows:

 

		2017			2016
Deferred tax assets
Net operating loss carryforward		$	14,251,000		$	11,227,000
Investment reserve			1,778,000			1,898,000
Capital loss carryforward			1,075,000			1,302,000
Wash sales			516,000			297,000
Unrealized gains on marketable securities			327,000			-
Charitable Contributions			79,000			-
Accrued vacation			14,000			14,000
Basis difference in Justice			-			1,629,000
Depreciation and amortization			-			186,000
Constructive sales			-			18,000
Valuation allowance			(3,388,000)			(2,824,000)
			14,652,000			13,747,000
Deferred tax liabilities
Basis difference in Justice			(2,063,000)			-
Depreciation and amortization			(898,000)			-
State taxes			(764,000)			(890,000)
Unrealized gains on marketable securities						(857,000)
Deferred gains on real estate sale						(912,000)
			(3,725,000)			(2,659,000)
Net deferred tax assets		$	10,927,000		$	11,088,000

 

 

 

Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions. As of June 30, 2017, it has been determined there are no uncertain tax positions likely to impact the Company.

 

The Partnership files tax returns as prescribed by the tax laws of the jurisdictions in which it operates and is subject to examination by federal, state and local jurisdictions, were applicable.

 

As of June 30, 2017, tax years beginning in fiscal 2011 remain open to examination by the major tax jurisdictions, and are subject to the statute of limitations.