Net income from operations before provision for income taxes is shown below:

The provision for income tax expense by jurisdiction and the effective tax rate for the three and nine months ended March 31, 2021 and 2020 are shown below:

Tax Balances and Activity

Income Taxes Payable

As of March 31, 2021 and June 30, 2020, income taxes payable totaled $15.9 million and $2.1 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 March 31, 2021 and June 30, 2020, 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.  A tax valuation allowance was considered unnecessary as of March 31, 2021 and June 30, 2020.

As of March 31, 2021, the condensed consolidated balance sheets reflects the deferred tax items for each tax-paying component (i.e., federal and state), resulting in a federal and state deferred tax liability of $20.2 million and $0.2 million, respectively. As of June 30, 2020, the condensed consolidated balance sheets reflect a state deferred tax asset of $1.0 million and a federal deferred tax liability of $1.1 million, respectively.

During the quarter, JMB became a wholly owned subsidiary of the Company as a result of our acquisition of the remaining interest that we did not previously own.  On the Acquisition Date, the Company has considered the deferred tax impact of the excess fair value of the assets and liabilities accounted for in the business combination over their historical cost basis. Included in the March 31, 2021 balance is $21.4 million relating to the excess fair value of intangibles other than goodwill over their historical cost basis and $0.4 million of JMB’s historical carryover deferred taxes that we assumed. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for the assets acquired and liabilities assumed, including intangible assets and taxation-related balances as well as for potential unrecorded liabilities. We expect to finalize this determination on or before our quarter ending June 30, 2021 and our deferred taxes may change as a result.

Net Operating Loss Carryforwards and Tax Credits

As of March 31, 2021 and June 30, 2020, the Company has approximately $12.6 million and $12.6 million of state net operating loss carryforwards, respectively.  As of March 31, 2021 and June 30, 2020, the Company’s tax-effected net operating loss carryforwards were $0.9 million and $0.9 million respectively. The state net operating loss carryforwards start to expire in the fiscal year ending June 30, 2030.

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 income. 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 nine months ended March 31, 2021, there was no material movement in unrecognized tax benefits including interest and penalties.

During the quarter, JMB became a wholly owned subsidiary of the Company as a result of our taxable stock purchase of the remaining interest in JMB. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for the assets acquired and liabilities assumed, including intangible assets and taxation-related balances as well as for potential unrecorded liabilities and unrecognized tax benefits. We expect to finalize this determination on or before our quarter ending June 30, 2021.

Tax Examinations

In November 2020, the Internal Revenue Service notified JMB that its tax return for the period ended December 31, 2018 has been selected for examination. The audit is in the early stage of information exchange. We are unable to determine the outcome of the audit at this time.