Income Taxes |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes |
INCOME TAXES Income (loss) from operations before provision for income taxes is shown below:
The Company files a consolidated federal income tax return based on a June 30 tax year end. The expense from provision for income taxes for the three months ended September 30, 2018 and 2017 consists of the following:
The effective tax rate for the three months ended September 30, 2018 and 2017 are set forth below:
Tax Cuts and Jobs Act
The comparability of our effective tax rate in the first quarter of fiscal 2019 compared to the corresponding prior year period was impacted by the U.S. Tax Cuts and Jobs Act of 2017 (the Tax Act), which was effective for the Company starting in our second quarter of fiscal 2018. Information regarding our adoption and prospective impacts of the Tax Act on our tax is included in our Annual Report on Form 10-K for our fiscal year ended June 30, 2018. The initial one-time tax expense related to the enactment of the Tax Act has been accounted for in the prior fiscal year ended June 30,2018 based on provisional estimates pursuant to ASU 2018-05. Subsequent adjustments, if any, related to our enactment of the Tax Act will be accounted for within the measurement period in accordance with SAB 118 in the period such adjustments are identified. This one-time provisional tax expense incorporate, among other factors, assumptions made based on interpretations of the Tax Act and existing tax laws along with a range of historical financial and tax-specific facts and information, including estimates of deferred tax balances pending finalization of those balances.
Tax Balances and Activity
Income Taxes Receivable and Payable
As of September 30, 2018 and June 30, 2018, income taxes receivable totaled $1.6 million and $1.6 million, respectively.
Deferred Tax Assets and Liabilities
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized by evaluating both positive and negative evidence. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As of September 30, 2018 and June 30, 2018, management concluded that it was more likely than not that the Company would be able to realize the benefit of the U.S. federal and state deferred tax assets. We based this conclusion on historical and projected operating performance, as well as our expectation that our operations will generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets.
As of September 30, 2018, the consolidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal and state), resulting in a state deferred tax asset of $1.6 million and a federal deferred tax asset of $1.8 million. As of June 30, 2018, the consolidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal and state), resulting in a state deferred tax asset of $1.7 million and a federal deferred tax asset of $2.2 million.
Net Operating Loss Carryforwards
As of September 30, 2018 and June 30, 2018, the Company has approximately $3.3 million and $2.9 million of federal net operating loss carryforwards and approximately $15.6 million and $15.5 million, state and city net operating loss carryforwards, respectively. The Company's combined federal, state and city tax-effected net operating loss carryforwards totaled, as of September 30, 2018 and June 30, 2018, $1.8 million and $1.7 million, respectively. These net operating loss carryforwards start to expire in the year ending June 30, 2022.
Unrecognized Tax Benefits
The Company has taken or expects to take certain tax benefits on its income tax return filings that it has not recognized a tax benefit (i.e., an unrecognized tax benefit) on its consolidated statements of operations. The Company's measurement of its uncertain tax positions is based on management's assessment of all relevant information, including, but not limited to prior audit experience, audit settlement, or lapse of the applicable statute of limitations. For the three months ended September 30, 2018 there was no material movement in unrecognized tax benefits including interest and penalties.
Tax Examinations
There has been no material change to our open tax examinations, except for the closing of the IRS examination of the Company's fiscal 2015 federal income tax return. Information related to open tax examinations is included in our 2018 Annual Report on Form 10-K for fiscal year ended June 30, 2018.
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