Entity information:
Note
14:
     
Income Taxes
 
 
The provisions for income taxes for the years ended
March 31, 2017
and
2016
consist of the following components:
 
   
March 31,
  
 
 
2017
 
  
2016
  
Current:
                
Federal
 
$
(10,911
)
   $
(19,684
 )
State
 
 
(5,193
)
    
(5,205
 )
Deferred income tax
                
Federal
 
 
(610,084
)
    
434,189
 
State
 
 
(131,817
)
    
12,391
 
Total
 
$
(758,005
)
   $
421,691
 
 
A reconciliation of the provision for taxes on income from the statutory federal income tax rate to the effective income tax rates follows:
 
   
March 31,
  
 
 
2017
 
  
2016
  
                 
Tax at statutory federal income tax rate
 
$
(573,507
)
   $
111,886
 
Tax effect of:
                
Tax-exempt income
 
 
(260,637
)
    
(133,030
 )
State income taxes, net of federal impact
 
 
(90,427
)
    
4,743
 
Nondeductible expenses and other
 
 
166,566
 
    
438,092
 
Income tax (benefit) expense
 
$
(758,005
)
   $
421,691
 
 
The following is a summary of the tax effects of the temporary differences and tax attributes between financial and income tax accounting that give rise to deferred tax assets and deferred tax liabilities as of
March 31:
 
Deferred tax assets:
 
2017
 
  
2016
  
Allowance for loan losses
 
$
887,510
 
   $
688,066
 
Nonaccrual interest
 
 
197,363
 
    
194,900
 
Deferred compensation
 
 
822,939
 
    
156,164
 
Foreclosed real estate write down and holding costs
 
 
221,010
 
    
221,010
 
Deferred loan costs
 
 
42,285
 
    
35,070
 
Capital loss carryforward
 
 
48,872
 
    
-
 
Charitable contribution carryforward
 
 
42,098
 
    
38,101
 
Net operating loss carryforward
 
 
4,414,529
 
    
625,612
 
Stock based payment awards
 
 
80,833
 
    
64,799
 
Unrealized loss on investment securities available for sale
 
 
862,673
 
    
14,410
 
AMT credit carryover
 
 
225,294
 
    
169,728
 
Acquisition activity
 
 
1,078,763
 
    
969,105
 
 
 
 
8,924,169
 
    
3,176,965
 
Valuation allowance on deferred tax asset
 
 
(42,364
)
    
(21,218
 )
 
 
 
8,881,805
 
    
3,155,747
 
                 
Deferred tax liabilities:
                
FHLB stock dividends
 
 
91,004
 
    
67,245
 
Goodwill and other intangible assets
 
 
717,933
 
    
588,727
 
Accumulated depreciation
 
 
65,193
 
    
93,576
 
Other
 
 
30,825
 
    
53,058
 
 
 
 
904,955
 
    
802,606
 
                 
Net deferred tax asset
 
$
7,976,850
 
   $
2,353,141
 
 
It is more likely than
not
that the Company will be able to realize the recorded net deferred income tax asset. This is based on projections of future taxable income. As of
March 31, 2017
and
2016,
the Company recorded a valuation allowance of
$42,364
and
$21,218,
respectively, related to the holding company’s State of Maryland net operating loss carryforward. The Company has a federal net operating loss carryforward of
$11.2
million as of
March 31, 2017,
which will expire within the period of the years ending
March 31, 2030
through
2036.
In addition, other tax attributes consisted of capital loss carryforwards of
$123,900,
charitable contribution carryforwards of
$10,135,
and AMT credit carryovers of
$225,294
at
March 31, 2017.
Charitable contribution and AMT credit carryovers have a limited life of
fiv
e
years.
 
On
May 13, 2016
we acquired Fraternity, which had federal NOL carryforwards of approximately
$4.5
million at the date of acquisition that will expire between fiscal years ending
March 31, 2030
and
2036.
As a result of the change in ownership, the utilization of Fraternity’s NOL carryforwards is subject to limitations imposed by the Internal Revenue Code.
 
The Company’s tax returns are subject to review and examination by federal and state taxing authorities. The Company’s tax returns are currently open to audit under the applicable statutes of limitations by the Internal Revenue Service for the years ended
March 31, 2013
through
March 31, 2017.
The Company does
not
have any uncertain tax positions that are deemed material, and did
not
recognize any adjustments for unrecognized tax benefits.