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Income Taxes
 12 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
As of fiscal year ended June 30, 2022, the Company maintains the ability to access the earnings of foreign subsidiaries. The Company considered recording a deferred tax liability related to federal, state and withholding tax and determined that no liability should be recorded. There is no certainty as to the timing of the distributions of such earnings to the U.S. in whole or in part.

Income tax expense (benefit) consists of:
 Fiscal Year Ended June 30,
 202220212020
 (in thousands)
Current:
Federal$16,895 $9,132 $13,892 
State5,238 1,261 3,244 
Foreign3,896 874 1,188 
Total current26,029 11,267 18,324 
Deferred:
Federal3,429 207 (8,526)
State129 (1,297)(2,667)
Foreign338 1,969 320 
Total deferred3,896 879 (10,873)
Provision for income taxes$29,925 $12,146 $7,451 

A reconciliation is provided below of the U.S. Federal income tax expense for the fiscal years ended June 30, 2022, June 30, 2021 and June 30, 2020 with the applicable statutory rate of 21%.
 Fiscal Year Ended June 30,
 202220212020
 (in thousands)
U.S. statutory rate21.0 %21.0 %21.0 %
U.S. Federal income tax at statutory rate$24,911 $12,082 $(15,073)
Increase (decrease) in income taxes due to:
State and local income taxes, net of Federal benefit4,265 996 1,316 
Tax credits(796)(170)(1,419)
Valuation allowance(200)3,472 1,699 
Effect of varying statutory rates in foreign operations, net1,145 1,051 1,374 
Stock compensation(121)1,094 41 
Capitalized acquisition costs— — 59 
Disallowed interest— 86 1,639 
Earnings from foreign subsidiaries928 124 1,661 
Net favorable recovery— — (6,517)
Losses on dispositions— (2,897)— 
Global intangible low taxed income tax
630 (45)(128)
Non-deductible goodwill impairment— — 20,180 
Nontaxable income(2,050)(1,628)— 
Notional interest deduction on net equity(780)(568)— 
Other1,993 (1,451)2,619 
Provision for income taxes$29,925 $12,146 $7,451 
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:
 June 30,
 20222021
 (in thousands)
Deferred tax assets derived from:
Allowance for accounts receivable$3,630 $5,557 
Inventories3,510 5,577 
Nondeductible accrued expenses7,859 8,024 
Net operating loss carryforwards705 892 
Tax credits6,410 7,138 
Deferred compensation6,548 7,893 
Stock compensation4,001 2,977 
Capital loss carryforwards7,831 7,633 
Timing of amortization deduction from intangible assets5,676 4,880 
Total deferred tax assets46,170 50,571 
Valuation allowance(13,181)(13,996)
Total deferred tax assets, net of allowance32,989 36,575 
Deferred tax liabilities derived from:
Timing of depreciation and other deductions from building and equipment(3,035)(3,749)
Timing of amortization deduction from goodwill(5,693)(582)
Timing of amortization deduction from intangible assets(11,737)(14,345)
Total deferred tax liabilities(20,465)(18,676)
Net deferred tax assets$12,524 $17,899 

The components of pretax earnings are as follows:
 Fiscal Year Ended June 30,
 202220212020
 (in thousands)
Domestic$93,586 $39,511 $(83,517)
Foreign25,037 18,024 11,741 
Worldwide pretax earnings$118,623 $57,535 $(71,776)

As of June 30, 2022, the Company will maintain the ability to access the earnings of foreign subsidiaries. The Company considered recording a deferred tax liability related to federal, state and withholding tax and determined that no liability should be recorded. There is no certainty as to the timing of the distribution of such earnings to the U.S. in whole or in part.

As of June 30, 2022, there were (i) gross net operating loss carryforwards of approximately $1.4 million for U.S. federal income tax purposes; (ii) gross state net operating loss carryforwards of approximately $5.6 million; (iii) foreign gross net operating loss carryforwards of approximately $0.8 million; (iv) state income tax credit carryforwards of approximately $2.5 million that began to expire in the 2021 tax year; (v) withholding tax credits of approximately $4.3 million; (vi) foreign tax credits of $0.1 million, and (vii) gross capital loss carryovers of $30.4 million. The Company maintains a valuation allowance of $0.3 million for U.S. federal income tax purposes, $7.9 million for capital loss carryforwards, $0.2 million for foreign net operating losses, a less than $0.1 million valuation allowance for state net operating losses, a $4.3 million valuation allowance for withholding tax credits, a $0.1 million valuation allowance for foreign tax credits, and a $0.3 million valuation allowance for state income tax credits, where it was determined that, in accordance with ASC 740, it is more likely than not that they cannot be utilized.
The Company adopted ASU 2016-09 during fiscal year 2018 which required the Company to recognize excess tax benefits and tax deficiencies as income tax expense or benefit for stock award settlements. The Company recognized net tax benefit of $0.3 million for the fiscal year ended June 30, 2022, net tax expense of $1.1 million for the fiscal year ended June 30, 2021 and net tax expense of less than $0.1 million for the fiscal year ended June 30, 2020.

As of June 30, 2022, the Company had gross unrecognized tax benefits of $1.1 million, $0.8 million of which, if recognized, would affect the effective tax rate. This reflects a decrease of less than $0.1 million on a gross basis over the prior fiscal year. The Company does not expect that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Income Statement. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheet. The total amount of interest and penalties accrued, but excluded from the table below, were $1.2 million, $1.1 million and $1.0 million for the fiscal years ended June 30, 2022, 2021 and 2020, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
June 30,
202220212020
 (in thousands)
Beginning Balance$1,121 $1,156 $1,234 
Additions based on tax positions related to the current year139 68 137 
Reduction for tax positions of prior years(195)(103)(215)
Ending Balance$1,065 $1,121 $1,156 

The Company conducts business globally and, as a result, one or more of its subsidiaries files income tax returns in the United States federal, various state, local and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities in countries in which it operates. With certain exceptions, the Company is no longer subject to state and local, or non-United States income tax examinations by tax authorities for tax years before June 30, 2017.