Note E — Income Taxes
The income tax provision consisted of the following for the fiscal years ended March 31, 2015, 2016 and 2017:
|
|
|
2015 |
|
|
2016 |
|
|
2017 |
|
|||
|
Current — Federal |
|
$ |
16,534,000 |
|
|
$ |
16,600,000 |
|
|
$ |
16,456,000 |
|
|
Current — State |
|
|
136,000 |
|
|
|
2,591,000 |
|
|
|
2,834,000 |
|
|
Subtotal |
|
|
16,670,000 |
|
|
|
19,191,000 |
|
|
|
19,290,000 |
|
|
Deferred — Federal |
|
|
312,000 |
|
|
|
(1,679,000 |
) |
|
|
(1,508,000 |
) |
|
Deferred — State |
|
|
(8,000 |
) |
|
|
23,000 |
|
|
|
288,000 |
|
|
Subtotal |
|
|
304,000 |
|
|
|
(1,656,000 |
) |
|
|
(1,220,000 |
) |
|
|
|
$ |
16,974,000 |
|
|
$ |
17,535,000 |
|
|
$ |
18,070,000 |
|
The following is a reconciliation of the income tax provision from the statutory federal income tax rate to the effective rate for the fiscal years ended March 31, 2015, 2016 and 2017:
|
|
|
2015 |
|
|
2016 |
|
|
2017 |
|
|||
|
Income taxes at federal statutory rate (35%) |
|
$ |
15,947,000 |
|
|
$ |
16,121,000 |
|
|
$ |
16,643,000 |
|
|
State income taxes, net of federal benefit |
|
|
1,535,000 |
|
|
|
1,704,000 |
|
|
|
1,973,000 |
|
|
Uncertain tax positions |
|
|
1,346,000 |
|
|
|
78,000 |
|
|
|
88,000 |
|
|
Permanent items and tax credits |
|
|
94,000 |
|
|
|
(100,000 |
) |
|
|
(705,000 |
) |
|
Adjustments to returns as filed |
|
|
(1,978,000 |
) |
|
|
(232,000 |
) |
|
|
80,000 |
|
|
Other |
|
|
30,000 |
|
|
|
(36,000 |
) |
|
|
(9,000 |
) |
|
|
|
$ |
16,974,000 |
|
|
$ |
17,535,000 |
|
|
$ |
18,070,000 |
|
Deferred tax assets and liabilities at March 31, 2016 and 2017 are:
|
|
|
2016 |
|
|
2017 |
|
||
|
Deferred income tax assets: |
|
|
|
|
|
|
|
|
|
Accrued liabilities not currently deductible |
|
$ |
9,656,000 |
|
|
$ |
9,409,000 |
|
|
Allowance for doubtful accounts |
|
|
696,000 |
|
|
|
1,153,000 |
|
|
Stock-based compensation |
|
|
1,245,000 |
|
|
|
1,755,000 |
|
|
Accrued rent |
|
|
1,875,000 |
|
|
|
2,219,000 |
|
|
Other |
|
|
762,000 |
|
|
|
740,000 |
|
|
Deferred assets |
|
|
14,234,000 |
|
|
|
15,276,000 |
|
|
Deferred income tax liabilities: |
|
|
|
|
|
|
|
|
|
Excess of book over tax basis of fixed assets |
|
|
(16,151,000 |
) |
|
|
(15,666,000 |
) |
|
Intangible assets |
|
|
(5,555,000 |
) |
|
|
(5,960,000 |
) |
|
Other |
|
|
(434,000 |
) |
|
|
(336,000 |
) |
|
Deferred liabilities |
|
|
(22,140,000 |
) |
|
|
(21,962,000 |
) |
|
Net deferred tax liability |
|
$ |
(7,906,000 |
) |
|
$ |
(6,686,000 |
) |
Prepaid expenses and taxes include $301,000 at March 31, 2016 and accounts and taxes payable include $584,000 at March 31, 2017, for income taxes due in the first quarter of the following fiscal year.
A reconciliation of the financial statement recognition and measurement of uncertain tax positions during the current fiscal year is as follows:
|
Balance as of March 31, 2016 |
|
$ |
1,830,000 |
|
|
Additions based on tax positions related to the current year |
|
|
355,000 |
|
|
Additions for tax positions of prior years |
|
|
— |
|
|
Reductions for tax positions related to the current year |
|
|
(177,000 |
) |
|
Reductions for tax positions of prior years |
|
|
(124,000 |
) |
|
Balance as of March 31, 2017 |
|
$ |
1,884,000 |
|
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. During the years ended March 31, 2015, 2016 and 2017, the Company recognized approximately $57,000, $72,000 and $35,000 in interest and penalties, respectively. As of March 31, 2015, 2016 and 2017, accrued interest and penalties related to uncertain tax positions were $140,000, $212,000 and $247,000, respectively.
The tax fiscal years from 2013-2016 remain opened to examination by the major taxing jurisdictions to which the Company is subject.