Entity information:

8. Income Taxes

 

Reconciliation of income taxes with Federal and State taxable income:

 

    2017     2016  
Income before income taxes   $ 3,528,000     $ 4,317,000  
State income tax deduction     (205,000 )     (236,000 )
Interest and dividend income     (565,000 )     (638,000 )
Domestic production activities deduction     (270,000 )     (312,000 )
Nondeductible expenses and timing differences     241,000       18,000  
Taxable income   $ 2,729,000     $ 3,149,000  

 

The following schedule reconciles the provision for income taxes to the amount computed by applying the statutory rate to income before income taxes:

 

    2017     2016  
Income tax provision at statutory rate   $ 1,475,000     $ 1,805,000  
Increase (decrease) income taxes resulting from:                
State income taxes     (86,000 )     (99,000 )
Interest and dividend income     (236,000 )     (267,000 )
Domestic production activities     (113,000 )     (130,000 )
Deferred taxes     (13,000 )     (21,000 )
Other temporary and permanent differences     100,000       (57,000 )
Income tax expense   $ 1,127,000     $ 1,231,000  
                 
Federal tax rate     34.0 %     34.0 %
State tax rate     7.8 %     7.8 %
Blended statutory rate     41.8 %     41.8 %

  

Deferred tax assets (liabilities) consist of the following components at April 30, 2017 and 2016:

 

    2017     2016  
Deferred tax current assets (liabilities):                
Inventory valuation     31,000       30,000  
Allowance for doubtful accounts     1,000       —  
263A adjustment     77,000       98,000  
Accrued vacation     38,000       34,000  
Accumulated unrealized (gain)/loss on investments     (890,000 )     (249,000 )
Net deferred tax assets (liabilities)   $ (743,000 )   $ (87,000 )
                 
Deferred long-term tax assets (liabilities):                
Depreciation     (163,000 )     (191,000 )
Net deferred long-term tax assets (liabilities)   $ (163,000 )   $ (191,000 )