14.

INCOME TAXES

The provision (benefit) for income taxes from continuing operations consists of the following:


	Fiscal Year Ended December 31,			Eight Months Ended December 31,			Fiscal Year Ended April 30,
	2015			2014			2014		2013
Federal—
Current	$	2,899		$	2,231		$	—	$	—
Current benefit of loss carryforwards		(2,899	)		(2,231	)		—		—
Deferred		395			463			1,262		(2,827	)

		395			463			1,262		(2,827	)

State—
Current		1,112			500			219		1,040
Current benefit of loss carryforwards		(557	)		(402	)		—		(22	)
Deferred		401			142			318		(717	)

		956			240			537		301

	$	1,351		$	703		$	1,799	$	(2,526	)

Included in the current state tax provision for fiscal year 2013 is an $800 settlement with New York State, comprised of $430 of tax and $370 of interest. New York State had alleged that we were not permitted to file a single combined corporation franchise tax return with our subsidiaries. On January 18, 2011, the State had assessed a liability of $3,852, comprising $2,220 tax and $1,632 penalties and interest, for tax years ending April 30, 2004 through April 30, 2006. We had filed Petitions of Redetermination with the State of New York Division of Tax Appeals and had been scheduled for an administrative hearing on April 18-19, 2013. Tax years ending April 30, 2007 through April 30, 2009 were also being audited for the same tax matter. The settlement, which represented less than 8% of the potential cumulative liability for the years settled, was a monetary settlement without any change to our filing combined returns in New York and it closed tax years ending April 30, 2004 through April 30, 2010. Subsequent to the settlement of that audit, the State of New York began an audit of the tax years ended April 30, 2011 through April 30, 2013 and raised the same issue. We continued to believe that our position related to the filing of our State of New York tax returns was correct, and, based on the prior settlement and subsequent favorable litigation related to similar issues, we concluded at December 31, 2014 that no reserve would be required for our State of New York filings. During fiscal year 2015, we reached a settlement with the State of New York for the tax years ended April 30, 2011 through April 30, 2013 on a basis similar to the prior settlement to minimize out-of-pocket costs. Included in the current state tax provision for fiscal year 2015 is a $180 settlement paid to the State of New York for 2011-2013, which includes $168 tax and $12 interest. No audit has been initiated for tax years after 2013. Due to a change in law, we are permitted to and plan to elect to file a single combined corporation franchise tax return with our subsidiaries in New York beginning with 2015. We have not established any reserve under ASC 740 for the tax years ended April 30, 2014 and December 31, 2014, since we believed our position would more likely than not be successful.

The differences in the provision (benefit) for income taxes and the amounts determined by applying the Federal statutory rate to income before provision (benefit) for income taxes are as follows:


	Fiscal Year Ended December 31,			Eight Months Ended December 31,			Fiscal Year Ended April 30,
	2015			2014			2014			2013
Federal statutory rate		35	%		35	%		35	%		35	%
Tax at statutory rate	$	(3,650	)	$	(1,787	)	$	(8,929	)	$	(18,378	)
State income taxes, net of federal benefit		198			(59	)		(1,271	)		(1,076	)
Other increase in valuation allowance		5,272			2,532			13,605			22,510
Non-deductible expenses		467			505			505			494
Tax credits		(671	)		(380	)		(598	)		(660	)
Non-deductible equity income in subsidiaries and GreenFiber goodwill impairment		(415	)		(73	)		1,548			180
Decrease in valuation allowance due to BBI acquisition		—			—			—			(5,084	)
Tax over book basis in GreenFiber on sale		—			—			(2,570	)		—
Other, net		150			(35	)		(491	)		(512	)

	$	1,351		$	703		$	1,799		$	(2,526	)

Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. Deferred tax assets and liabilities consist of the following:


	December 31,						April 30,
	2015			2014			2014
Deferred tax assets:
Book over tax depreciation of property and equipment	$	37,383		$	31,535		$	28,868
Net operating loss carryforwards		36,187			40,357			36,594
Accrued expenses and reserves		31,611			28,929			30,690
Alternative minimum tax credit carryforwards		3,766			3,457			3,330
General business tax credit carryforwards		3,379			2,921			2,666
Stock awards		1,338			1,082			1,315
Unrealized loss on hedges and swaps		71			672			1,115
Capital loss carryforwards		—			—			2,510
Other		2,707			2,106			1,496

Total deferred tax assets		116,442			111,059			108,584
Less: valuation allowance		(93,007	)		(87,121	)		(84,540	)

Total deferred tax assets after valuation allowance		23,435			23,938			24,044

Deferred tax liabilities:
Amortization of intangibles		(28,935	)		(28,659	)		(28,210	)
Other		(95	)		(264	)		(286	)

Total deferred tax liabilities		(29,030	)		(28,923	)		(28,496	)

Net deferred tax liability	$	(5,595	)	$	(4,985	)	$	(4,452	)

As of December 31, 2015 we have, for federal income tax purposes, net operating loss carryforwards of approximately $72,873 that expire in the fiscal years ending December 31, 2032 through 2033 and state net operating loss carryforwards of approximately $86,351 that expire in the fiscal years ending December 31, 2016 through 2035. The net operating loss carryforwards include approximately $383 for which a benefit will be recorded in additional paid-in capital when realized. In addition, we have $3,766 minimum tax credit carryforwards available that are not subject to a time limitation and $3,379 general business credit carryforwards which expire in the fiscal years ending December 31, 2023 through 2035. Sections 382 and 383 of the Internal Revenue Code can limit the amount of net operating loss and credit carryforwards which may be used in a tax year in the event of certain stock ownership changes. We are not currently subject to these limitations but could become subject to them if there were significant changes in the ownership of our stock.

In assessing the realizability of carryforwards and other deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. We adjust the valuation allowance in the period management determines it is more likely than not that deferred tax assets will or will not be realized.

The net increase in the valuation allowance was $5,886 for fiscal year 2015 and $2,581 for transition period 2014. For fiscal year 2013, the valuation allowance decreased by $5,084 due to the recognition of additional reversing temporary differences from the deferred tax liability recorded through goodwill related to the BBI acquisition. The $5,084 deferred tax liability related to the BBI acquisition resulted from temporary differences related to the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes.

In determining the need for a valuation allowance, we have assessed the available means of recovering deferred tax assets, including the ability to carryback net operating losses, the existence of reversing temporary differences, the availability of tax planning strategies, and available sources of future taxable income. We have also considered the ability to implement certain strategies, such as a potential sale of assets that would, if necessary, be implemented to accelerate taxable income and use expiring deferred tax assets. We believe we are able to support the deferred tax assets recognized as of the end of the year based on all of the available evidence. The net deferred tax liability as of December 31, 2015 includes deferred tax liabilities related to amortizable goodwill, which are anticipated to reverse in an indefinite future period and which are not currently available as a source of taxable income.

The provisions of FASB ASC 740-10-25-5 prescribe the minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. Additionally, FASB ASC 740-10-25-5 provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. Under FASB ASC 740-10-25-5, an entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:


	Fiscal Year Ended December 31, 2015			Eight Months Ended December 31, 2014			Fiscal Year Ended April 30, 2014
Unrecognized tax benefits at beginning of period	$	3,073		$	3,061		$	3,879
Gross increases for tax positions of prior years		168			14			22
Gross decreases for tax positions of prior years		(1	)		(1	)		(229	)
Reductions resulting from lapse of statute of limitations		(409	)		(1	)		(611	)
Gross increases resulting from reversal of benefit from lapse of statute of limitations		716			—			—
Settlements		(168	)		—			—

Unrecognized tax benefits at end of period	$	3,379		$	3,073		$	3,061

The gross increases for tax positions of prior years for fiscal year 2015 includes $168 tax from the settlement with New York State, which is offset by the ($168) settlements for fiscal year 2015. Included in the balances at December 31, 2015, December 31, 2014 and April 30, 2014 are $279, $0 and $0, respectively, of unrecognized tax benefits (net of the federal benefit on state issues) that, if recognized, would favorably affect the effective income tax rate in future periods. We anticipate a decrease of $270 to unrecognized tax benefits within the next 12 months due to the expiration of the applicable statute of limitations.

Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. Related to uncertain tax positions during fiscal year 2015, transition period 2014, fiscal year 2014 and fiscal year 2013, we have accrued interest of $92, $143, $116 and $76 and penalties of $8, $8, $8 and $9, respectively. We accrued ($51), $26, $40 and $41 for interest and penalties in income tax expense related to uncertain tax positions during fiscal year 2015, transition period 2014, fiscal year 2014 and fiscal year 2013, respectively. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

We are subject to U.S. federal income tax, as well as income tax of multiple state jurisdictions. Due to Federal and state net operating loss carryforwards, income tax returns from years ending in 1998 through 2015 remain open for examination, with limited exceptions.