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Income Taxes

12 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

12. Income Taxes

The following are the components of income taxes (in thousands):

Fiscal years ended June 30,		2018				2017

Current
Federal		$	1,192			$	1,712
State			542				314
			1,734				2,026

Deferred
Federal			562				(2	)
State			120				(1	)
			682				(3	)
		$	2,416			$	2,023

The reconciliation of income tax expense computed at the federal statutory tax rate of 28% and 34% for the fiscal years ended June 30, 2018 and 2017, respectively, to the provision for income taxes is as follows (in thousands):

Fiscal years ended June 30,		2018				2017

Tax at the statutory rate		$	1,788			$	1,765
State income taxes, net of federal benefit			319				196
Other			309				62
		$	2,416			$	2,023

Effective tax rate			37.9%				38.9%

Deferred income taxes reflect the net tax effect of temporary differences between the bases of assets and liabilities for financial reporting purposes and the bases used for income tax purposes. Significant components of the Company’s current and noncurrent deferred tax assets and liabilities as of June 30, 2018 and 2017 were as follows (in thousands):

Fiscal years ended June 30,		2018				2017

Deferred tax assets:
Allowance for doubtful accounts		$	66			$	39
Inventory capitalization			303				94
Stock compensation			277				159
Other			74				86
			720				378

Deferred tax liabilities:
Goodwill Amortization			(664	)			(101	)
Depreciation			(614	)			(153	)
			(1,278	)			(254	)
Net deferred income tax (liabilities) assets		$	(558	)		$	124

As of June 30, 2017, the net deferred income tax assets are included in Other Assets.

As of June 30, 2018, the Company was subject to potential federal and state tax examinations for the tax years including and subsequent to 2014.

As previously discussed, on December 22, 2017, the U.S. government enacted the Tax Act. The Tax Act represents significant U.S. federal tax reform legislation that includes a permanent reduction to the U.S. federal corporate income tax rate. The changes included in the Tax Act are broad and complex. The impact of the Tax Act on the Company’s financial statements as of and for the fiscal year ended June 30, 2018 is considered provisional until the necessary information is available and the Company can complete its assessment and calculations. The impact of the Tax Act on the Company’s financial statements as of and for the year ended June 30, 2018 is considered provisional until the necessary information is available and the Company can complete its assessment and calculations. The final impact of the Tax Act may differ from the impact based on the Company’s current estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to the Company’s estimates. The SEC has issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts.