The reconciliation of the provision for income taxes at the federal statutory rate of 35% to the actual tax expense or benefit for the applicable fiscal year was as follows:
| 2017 | 2016 | |||||||||||||||
| Amount |
% of Pre-tax Income |
Amount |
% of Pre-tax Income |
|||||||||||||
| Computed “expected” income tax (benefit) | $ | (51,400 | ) | (35.0 | )% | $ | 76,600 | 35.0 | % | |||||||
| Research and development credits | (13,100 | ) | (8.9 | ) | (15,700 | ) | (7.2 | ) | ||||||||
| Other, net | (9,700 | ) | (6.6 | ) | (7,600 | ) | (3.5 | ) | ||||||||
| Income tax expense (benefit) | $ | (74,200 | ) | (50.5 | )% | $ | 53,300 | 24.3 | % | |||||||
Deferred tax assets and liabilities consist of the following:
| 2017 | 2016 | |||||||
| Deferred tax assets: | ||||||||
| Amortization of intangible assets | $ | 390,000 | $ | 287,000 | ||||
| Research and development credits | 3,400 | - | ||||||
| Various accruals | 102,300 | 132,800 | ||||||
| Other | 55,000 | 48,900 | ||||||
| 550,700 | 468,700 | |||||||
| Deferred tax liability: | ||||||||
| Depreciation of property and amortization of goodwill | (45,600 | ) | (52,200 | ) | ||||
| Net deferred tax assets | $ | 505,100 | $ | 416,500 | ||||
The breakdown between current and long-term deferred tax assets and liabilities is as follows:
| 2017 | 2016 | |||||||
| Current deferred tax assets | $ | 129,000 | $ | 140,600 | ||||
| Long-term deferred tax assets | 421,700 | 328,100 | ||||||
| Long-term deferred tax liabilities | (45,600 | ) | (52,200 | ) | ||||
| Net long-term deferred tax assets | 376,100 | 275,900 | ||||||
| Net deferred tax assets | $ | 505,100 | $ | 416,500 | ||||
ASC No. 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC No. 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. As of June 30, 2017 and 2016, the Company did not have any unrecognized tax benefits related to various federal and state income tax matters.
The Company’s policy is to recognize interest and penalties on any unrecognized tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits. The Company is subject to U.S. federal income tax, as well as various state jurisdictions. The Company is currently open to audit under the statute of limitations by the federal and state jurisdictions for the years ending June 30, 2014 and after. The Company does not anticipate any material amount of unrecognized tax benefits within the next 12 months.