A-Mark Precious Metals, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

Income Taxes

6 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

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



in thousands	Three Months Ended				Six Months Ended
	December 31, 2018		December 31, 2017		December 31, 2018		December 31, 2017
U.S.	$	934	$	266	$	2,859	$	950
Foreign	10		—		18		34
Net income before provision for income taxes	$	944	$	266	$	2,877	$	984

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 and six months ended December 31, 2018 and 2017 consists of the following:



in thousands
	Three Months Ended				Six Months Ended
	December 31, 2018		December 31, 2017		December 31, 2018		December 31, 2017
Federal	$	202	$	314	$	621	$	566
State and local	38		10		116		31
Foreign	2		—		4		1
Provision for income taxes	$	242	$	324	$	741	$	598

The effective tax rate for the three and six months ended December 31, 2018 and 2017 are set forth below:



in thousands
	Three Months Ended				Six Months Ended
	December 31, 2018		December 31, 2017		December 31, 2018		December 31, 2017
Effective tax rate	25.6	%	121.8	%	25.8	%	60.8	%

Tax Cuts and Jobs Act

The comparability of our effective tax rate in the three and six months ended December 31, 2018 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. We completed our assessment of the income tax effects of the Tax Act within the measurement period as required in ASU 2018-05 ("SAB 118").

Tax Balances and Activity

Income Taxes Receivable and Payable

As of December 31, 2018 and June 30, 2018, income taxes receivable totaled $1.5 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 December 31, 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 December 31, 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 $1.6 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 December 31, 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 December 31, 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 and six months ended December 31, 2018 there was no material movement in unrecognized tax benefits including interest and penalties.

Tax Examinations

Information related to open tax examinations is included in our 2018 Annual Report on Form 10-K for the fiscal year ended June 30, 2018. All open tax examinations remain open, except for the IRS examination of the Company's fiscal 2015 federal tax return.