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Income Taxes | 12 Months Ended
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Jul. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Note 19—Income Taxes The components of income before income taxes are as follows: Components of Income Before Income Taxes
Year ended July 31 (in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
Domestic |  | $ | 48,036 |  |  | $ | 25,025 |  |  | $ | 60,969 |
Foreign |  |  | 12,771 |  |  |  | 9,858 |  |  |  | 4,255 |
INCOME BEFORE INCOME TAXES |  | $ | 60,807 |  |  | $ | 34,883 |  |  | $ | 65,224 |
Significant components of the Company’s deferred income tax assets consist of the following: Significant Components of Deferred Income Taxes
July 31 (in thousands) |  | 2023 |  |  | 2022 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Bad debt reserve |  | $ | 1,117 |  |  | $ | 959 |
Accrued expenses |  |  | 4,825 |  |  |  | 3,570 |
Stock options and restricted stock |  |  | 361 |  |  |  | 42 |
Charitable contributions |  |  | 724 |  |  |  | 730 |
Depreciation |  |  | (585 | ) |  |  | (640 | )
Unrealized gain |  |  | 4,407 |  |  |  | 2,895 |
Net operating loss |  |  | 23,870 |  |  |  | 40,733 |
Total deferred income tax assets |  |  | 34,719 |  |  |  | 48,289 |
Valuation allowance |  |  | (10,618 | ) |  |  | (11,588 | )
NET DEFERRED INCOME TAX ASSETS |  | $ | 24,101 |  |  | $ | 36,701 |
IDT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The (provision for) benefit from income taxes consist of the following: Schedule of (Provision for) Benefits from Income Taxes
Year ended July 31 (in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (47 | ) |  | $ | (45 | ) |  | $ | — |
State and local |  |  | (1,511 | ) |  |  | (863 | ) |  |  | (512 | )
Foreign |  |  | (1,275 | ) |  |  | (729 | ) |  |  | (811 | )
Current |  |  | (2,833 | ) |  |  | (1,637 | ) |  |  | (1,323 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (14,340 | ) |  |  | (2,596 | ) |  |  | 26,408 |
State and local |  |  | 16 |  |  |  | (19 | ) |  |  | (57 | )
Foreign |  |  | 716 |  |  |  | (1,626 | ) |  |  | 6,639 |
Deferred |  |  | (13,608 | ) |  |  | (4,241 | ) |  |  | 32,990 |
(PROVISION FOR) BENEFIT FROM INCOME TAXES |  | $ | (16,441 | ) |  | $ | (5,878 | ) |  | $ | 31,667 |
The differences between income taxes expected at the U.S. federal statutory income tax rate and income taxes provided are as follows: Schedule of Differences Between Income Taxes Expected Federal Statutory Income Taxes
Year ended July 31 (in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
U.S. federal income tax at statutory rate |  | $ | (12,770 | ) |  | $ | (7,325 | ) |  | $ | (13,697 | )
Valuation allowance |  |  | 970 |  |  |  | 1,147 |  |  |  | 47,862 |
Foreign tax rate differential |  |  | (1,068 | ) |  |  | (1,059 | ) |  |  | (190 | )
Nondeductible expenses |  |  | (1,767 | ) |  |  | 2,044 |  |  |  | (636 | )
Other |  |  | (625 | ) |  |  | 1 |  |  |  | 299 |
Foreign restructuring |  |  | — |  |  |  | — |  |  |  | (1,510 | )
State and local income tax, net of federal benefit |  |  | (1,181 | ) |  |  | (686 | ) |  |  | (461 | )
(PROVISION FOR) BENEFIT FROM INCOME TAXES |  | $ | (16,441 | ) |  | $ | (5,878 | ) |  | $ | 31,667 |
The Company’s cumulative undistributed foreign earnings are included in retained earnings in the Company’s consolidated balance sheets and consisted of approximately $302 million at July 31, 2023. The Company has concluded that the earnings remain permanently reinvested. At July 31, 2023, the Company had U.S. federal net operating loss carryforwards of approximately $37 million. These loss carryforwards are available to offset future U.S. federal taxable income. U.S. federal net operating loss carryforwards of $34 million expire in fiscal 2028 through fiscal 2038, and $3 million do not expire. The Company has foreign net operating loss carryforwards of approximately $77 million, of which approximately $65 million does not expire, approximately $11 million expires in two to ten years and approximately $1 million expires in twenty years. These foreign loss carryforwards are available to offset future taxable income in the countries in which the losses were incurred. The Company’s subsidiary, net2phone, has additional U.S. federal net operating loss carryforwards of approximately $7 million, which will expire through fiscal 2027. With the reacquisition of net2phone by the Company in March 2006, its losses were limited under Internal Revenue Code Section 382 to approximately $7 million per year. The net operating loss carryforwards do not include any excess benefits related to stock options or restricted stock. IDT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The change in the valuation allowance is as follows: Summary of Changes in Valuation Allowance
Year ended July 31 (in thousands) |  | Balance at beginning of year |  |  | Additions charged to costs and expenses |  |  | Deductions |  |  | Balance at end of year |
2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserves deducted from deferred income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  | $ | 11,588 |  |  | $ | 2,537 |  |  | $ | (3,507 | ) |  | $ | 10,618 |
2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserves deducted from deferred income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  | $ | 11,540 |  |  | $ | 48 |  |  | $ | — |  |  | $ | 11,588 |
2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserves deducted from deferred income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  | $ | 58,700 |  |  | $ | 835 |  |  | $ | (47,995 | ) |  | $ | 11,540 |
In fiscal 2023, the Company decreased the valuation allowance by $1.0 million, which included a decrease of $2.8 million due to the utilization or disposal of previously valued deferred income tax assets and a release of $0.7 million for profitability in the United Kingdom, net of an establishment of $2.5 million for deferred income tax assets that were not more likely than not going to be utilized prior to expiration. In fiscal 2021, the Company released $46.5 million of its valuation allowance on the portion of the deferred income tax assets that it is more likely than not going to utilize. This release was mostly related to domestic deferred income tax assets. The Company used the framework of Accounting Standards Codification Income Taxes (Topic 740) to determine whether the valuation allowance should be maintained or reversed. The Company considered the scheduled expiration of its net operating losses included in its deferred tax assets, projected future taxable income, and tax planning strategies in its assessment of the valuation allowance. The primary factors that resulted in the valuation allowance release were the three consecutive years of profitability in the United States and expected future profitability in both the United States and the United Kingdom that will utilize a significant portion of the net operating losses. The Company’s tax planning strategies were not a significant factor in the analysis. At July 31, 2023 and 2022, the Company did not have any unrecognized income tax benefits. There were no changes in the balance of unrecognized income tax benefits in fiscal 2023, fiscal 2022, and fiscal 2021. At July 31, 2023, the Company did not expect any changes in unrecognized income tax benefits during the next twelve months. In fiscal 2023, fiscal 2022, and fiscal 2021, the Company did not record any interest and penalties on income taxes. At July 31, 2023 and 2022, there was no accrued interest included in current income taxes payable. The Company currently remains subject to examinations of its tax returns as follows: U.S. federal tax returns for fiscal 2020 to fiscal 2023, state and local tax returns generally for fiscal 2019 to fiscal 2023, and foreign tax returns generally for fiscal 2019 to fiscal 2023.

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