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INCOME TAXES
 12 Months Ended
Jan. 31, 2025
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
12.INCOME TAXES

 

The provision for income taxes for fiscal years 2024, 2023, and 2022 consists of the following (amounts in thousands):

 

   2024   2023   2022 
                
Federal:               
Current  $4,232   $4,580   $4,485 
Deferred   13,522    14,102    2,925 
                
Total   17,754    18,682    7,410 
                
State and Local:               
Current   2,947    3,377    4,167 
Deferred   685    501    (2,035)
                
Total   3,632    3,878    2,132 
                
Provision for income taxes  $21,386   $22,560   $9,542 

The tax effects of significant temporary differences representing deferred tax assets and liabilities are as follows (amounts in thousands):

 

   January 31, 
   2025   2024 
           
Assets:          
General business credit carryforward  $4,151   $12,296 
Accrued liabilities   628    611 
State net operating loss carryforward   167    202 
Other items   311    288 
Valuation allowance   (132)   (160)
           
Total   5,125    13,237 
Liabilities:          
Basis in pass through entities, including depreciation   (7,470)   (6,334)
Other   (1,217)   (664)
           
Total   (8,687)   (6,998)
Net deferred tax (liability) asset  $(3,562)  $6,239 

 

The net deferred tax liability (asset) is reported on the accompanying Consolidated Balance Sheets based on net position by tax jurisdiction, with both federal positions and state positions recorded as net liabilities within “Deferred taxes” at January 31, 2025. At January 31, 2024, federal positions of approximately $7.8 million are recorded as assets on the Consolidated Balance Sheets within “Other assets” and state positions of $1.6 million are recorded as liabilities on the accompanying Consolidated Balance Sheets within “Deferred taxes”.

 

The Company has a general business credit carryforward, net of the impact of uncertain tax positions, of approximately $4.2 million and $12.3 million at January 31, 2025 and 2024, respectively. The Company can carry these credits forward for up to twenty years. The carryforward periods expire between fiscal years 2041 and 2042.

 

The Company has a valuation allowance of approximately $132,000 and $160,000 at January 31, 2025 and 2024, respectively, related to state net operating loss carryforwards. The Company decreased the valuation allowance by $28,000 in fiscal year 2024. These adjustments to the valuation allowance are a result of estimates of realizing certain future state tax benefits.

 

The Company assessed all available positive and negative evidence to determine whether it expects sufficient future taxable income will be generated to allow for the realization of existing federal deferred tax assets. There is sufficient objectively verifiable income for management to conclude that it is more likely than not that the Company will utilize available federal deferred tax assets prior to their expiration.

 

During fiscal year 2022, the Company recognized an income tax benefit for federal and state research and experimentation credits (net of uncertain tax position expense) of approximately $0.4 million. The credits can be used to reduce future income tax liabilities for up to 20 years.

 

The Company paid income taxes of approximately $7,895,000, $12,730,000, and $2,795,000 fiscal years 2024, 2023, and 2022, respectively. The Company did not receive any refunds in fiscal years 2024, 2023, and 2022.

 

Reconciliations of the federal statutory tax and the Company’s income tax expense for fiscal years 2024, 2023, and 2022 are as follows (amounts in thousands):

   2024   2023   2022 
                
Federal income tax at statutory rate  $19,503   $20,682   $9,971 
State and local taxes, net of federal tax benefit   3,008    3,299    1,725 
Research and experimentation credits   
-
    
-
    (2,542)
Nondeductible compensation expense   2,062    2,150    508 
Uncertain tax positions   11    (98)   2,281 
Noncontrolling interest   (3,228)   (3,650)   (2,523)
Other   30    177    122 
                
Total  $21,386   $22,560   $9,542 

 

The Company files a U.S. federal income tax return and income tax returns in various states. In general, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for fiscal years ended January 31, 2014 and prior. The Company is currently undergoing a federal income tax examination for the years ended January 31, 2015 through January 31, 2022 related to tax credits claimed on returns during those years.

 

The Company applies the provisions of ASC 740-10-25-5 for uncertain tax positions. As of January 31, 2025, total unrecognized tax benefits were approximately $18,880,000, and accrued penalties and interest were approximately $99,000. If the Company were to prevail on all unrecognized tax benefits recorded, the provision for income taxes would be reduced by approximately $18,795,000. In addition, the impact of penalties and interest would also benefit the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense.

 

On a quarterly and annual basis, the Company accrues for the effects of open uncertain tax positions and the related potential penalties and interest. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will increase or decrease during the next 12 months; however, the Company does not expect the change to have a material effect on results of operations or financial position. The Company accounts for uncertainty in income taxes by determining whether it is more likely than not the position will be sustained on audit, including resolution of any related tax audits. A reconciliation of the beginning and ending amount of unrecognized tax benefits, including interest and penalties, is as follows (amounts in thousands):

 

   Fiscal Year 
   2024   2023 
           
Unrecognized tax benefits, beginning of year  $18,965   $19,088 
Changes for tax positions for prior years   19    45 
Changes for tax positions for current year   (6)   (168)
           
Unrecognized tax benefits, end of year  $18,978   $18,965 

At January 31, 2025 and 2024, the total unrecognized tax benefits were included within the following lines on the accompanying Consolidated Balance Sheets (amounts in thousands):

 

   January 31, 
   2025   2024 
           
Other assets  $
-
   $16,372 
Refundable income taxes   2,002    2,007 
Deferred taxes   12,037    
-
 
Long-term taxes payable   4,334    
-
 
Other long-term liabilities   605    586 
           
Unrecognized tax benefits, end of year  $18,978   $18,965