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Income Taxes
 12 Months Ended
Jun. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
As of the fiscal year ended June 30, 2023, 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,
 202320222021
 (in thousands)
Current:
Federal$25,034 $16,895 $9,132 
State6,455 5,238 1,261 
Foreign4,507 3,896 874 
Total current35,996 26,029 11,267 
Deferred:
Federal(2,991)3,429 207 
State(541)129 (1,297)
Foreign1,294 338 1,969 
Total deferred(2,238)3,896 879 
Provision for income taxes$33,758 $29,925 $12,146 

A reconciliation is provided below of the U.S. Federal income tax expense for the fiscal years ended June 30, 2023, June 30, 2022 and June 30, 2021 with the applicable statutory rate of 21%.
 Fiscal Year Ended June 30,
 202320222021
 (in thousands)
U.S. statutory rate21.0 %21.0 %21.0 %
U.S. Federal income tax at statutory rate$25,588 $24,911 $12,082 
Increase (decrease) in income taxes due to:
State and local income taxes, net of Federal benefit4,559 4,265 996 
Tax credits(909)(796)(170)
Valuation allowance1,087 (200)3,472 
Effect of varying statutory rates in foreign operations, net2,751 1,145 1,051 
Stock compensation37 (121)1,094 
Disallowed interest— — 86 
Earnings from foreign subsidiaries957 928 124 
Losses on dispositions— — (2,897)
Global intangible low taxed income tax
1,551 630 (45)
Nontaxable income(3,189)(2,050)(1,628)
Notional interest deduction on net equity(733)(780)(568)
Other2,059 1,993 (1,451)
Provision for income taxes$33,758 $29,925 $12,146 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:
 June 30,
 20232022
 (in thousands)
Deferred tax assets derived from:
Allowance for accounts receivable$5,811 $3,630 
Inventories3,326 3,510 
Nondeductible accrued expenses7,561 7,859 
Net operating loss carryforwards596 705 
Tax credits8,430 6,410 
Deferred compensation7,173 6,548 
Stock compensation4,718 4,001 
Capital loss carryforwards7,348 7,831 
Timing of amortization deduction from intangible assets6,170 5,676 
Total deferred tax assets51,133 46,170 
Valuation allowance(14,397)(13,181)
Total deferred tax assets, net of allowance36,736 32,989 
Deferred tax liabilities derived from:
Timing of depreciation and other deductions from building and equipment(1,533)(3,035)
Timing of amortization deduction from goodwill(10,886)(5,693)
Timing of amortization deduction from intangible assets(10,369)(11,737)
Total deferred tax liabilities(22,788)(20,465)
Net deferred tax assets$13,948 $12,524 

The components of pretax earnings are as follows:
 Fiscal Year Ended June 30,
 202320222021
 (in thousands)
Domestic$94,994 $93,586 $39,511 
Foreign26,856 25,037 18,024 
Worldwide pretax earnings$121,850 $118,623 $57,535 

As of June 30, 2023, there were (i) gross net operating loss carryforwards of approximately $1.3 million for U.S. federal income tax purposes; (ii) gross state net operating loss carryforwards of approximately $1.5 million; (iii) foreign gross net operating loss carryforwards of approximately $1.1 million; (iv) state income tax credit carryforwards of approximately $3.0 million that began to expire in the 2022 tax year; (v) withholding tax credits of approximately $5.0 million; (vi) foreign tax credits of $1.0 million, and (vii) gross capital loss carryovers of $29.2 million. The Company maintains a valuation allowance of $0.1 million for U.S. federal net operating losses, $7.3 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 $5.1 million valuation allowance for withholding tax credits, a $1.0 million valuation allowance for foreign tax credits, and a $0.6 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 recognizes excess tax benefits and tax deficiencies as income tax expense or benefit for stock award settlements in accordance with ASU 2016-09. The Company recognized net tax benefit of less than $0.1 million for the fiscal year ended June 30, 2023, net tax benefit of $0.3 million for the fiscal year ended June 30, 2022 and net tax expense of $1.1 million for the fiscal year ended June 30, 2021.

As of June 30, 2023, the Company had gross unrecognized tax benefits of $1.2 million, $0.9 million of which, if recognized, would affect the effective tax rate. This reflects an increase 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, $1.2 million and $1.1 million for the fiscal years ended June 30, 2023, 2022 and 2021, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
June 30,
202320222021
 (in thousands)
Beginning Balance$1,065 $1,121 $1,156 
Additions based on tax positions related to the current year123 139 68 
Reduction for tax positions of prior years(16)(195)(103)
Ending Balance$1,172 $1,065 $1,121 

A court ruling issued in Brazil in June 2023 confirmed that Brazilian state-provided tax benefits are not subject to income tax. The Company recorded, discrete to the June 30, 2023 quarter, an income tax benefit of $2.2 million related to the confirmation of the recovery of state-provided tax benefits.

Subsequent to the 2023 fiscal year-end, the IRS issued Notice 2023-55 which provides taxpayers with Brazilian subsidiaries temporary relief from the final foreign tax credit regulations. This Notice will apply to the Company’s fiscal year ended June 30, 2023 and the resulting tax benefit of approximately $1.5 million will be recognized as a discrete item in the first quarter of the June 30, 2024 fiscal year.
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, 2018.