XML 29 R20.htm IDEA: XBRL DOCUMENT v3.22.1
Note 12 - Income Taxes
 9 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

12)     Income Taxes

 

The Company's effective tax rate from continuing operations for the third quarter of fiscal year 2022 was 24.0% compared with 56.3% for the prior year quarter. The tax rate was impacted in the current period by the following items: (i) a discrete benefit related to a reduction in an uncertain tax position, (ii) a discrete benefit related to a return to provision adjustment, and (iii) the jurisdictional mix of earnings. The tax rate was impacted in the prior period by the following items: (i) reduction of global intangible low-taxed income, (ii) the jurisdictional mix of earnings and (iii) the establishment of a valuation allowance against our deferred tax asset attributable to the divestiture of Enginetics Corporation during the quarter. The divestiture of the Enginetics business gave rise to a capital loss carryforward, which, if unused, will expire after 5 years. Capital losses are allowed only to the extent of capital gains; however, because the Company did not have capital gains in the prior period or the applicable carryback period, the capital loss was carried forward. The Company believes it is more likely than not that the capital loss carryforward will expire unutilized. Therefore, a full valuation allowance was established, which negatively impacted the effective tax rate. The valuation allowance could be released if it is determined that the Company will have sufficient taxable income of the appropriate character within the carryforward period.

 

The Company's effective tax rate from continuing operations for the first nine months of the fiscal year ending June 30, 2022 was 24.5% compared with 25.3% for the prior year period. The tax rate was impacted in the current period by the following items: (i) a discrete tax benefit related to equity compensation, (ii) a discrete benefit related to a reduction in an uncertain tax position, (iii) a discrete benefit related to a return to provision adjustment, (iv) the jurisdictional mix of earnings, and (v) foreign withholding taxes.