Federal, State and Local Income Taxes

6 Months Ended

Oct. 31, 2014

Note 8 - Federal, State and Local Income Taxes:

In accordance with the requirements of the Income Tax Topic of the FASB’s ASC, the Company’s provision for income taxes includes the following:


	Three Months Ended October 31,					Six Months Ended October 31,
($ in thousands)	2014			2013		2014		2013
Current tax expense:
Federal	$	1,083		$	838	$	1,952	$	1,054
State and local		62			46		152		74
Current tax expense		1,145			884		2,104		1,128
Deferred tax expense:
Federal		(106	)		24		-		530
State and local		40			10		64		91
Deferred tax expense		(66	)		34		64		621
Income tax provision:	$	1,079		$	918	$	2,168	$	1,749

Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. The tax effect of temporary differences giving rise to the Company’s deferred tax asset and deferred tax liability are as follows:

	October 31,			April 30,
($ in thousands)	2014			2014
Federal tax benefit (liability):
Unrealized gains on securities available-for-sale	$	(124	)	$	(134	)
Operating lease deferred obligation		70			70
Deferred professional fees		30			36
Deferred charges		268			327
Total federal tax benefit		244			299

State and local tax benefits:
Other		54			65
Total state and local tax benefits		54			65
Deferred tax asset, short term	$	298		$	364

	October 31,			April 30,
($ in thousands)	2014			2014
Federal tax liability (benefit):
Deferred gain on deconsolidation of EAM	$	17,679		$	17,679
Deferred non-cash post-employment compensation		(619	)		(619	)
Depreciation and amortization		2,463			2,416
Other		530			646
Total federal tax liability		20,053			20,122

State and local tax liabilities (benefits):
Deferred gain on deconsolidation of EAM		2,185			2,181
Deferred non-cash post-employment compensation		(77	)		(76	)
Depreciation and amortization		304			298
Deferred professional fees		(4	)		(5	)
Total state and local tax liabilities		2,408			2,398
Deferred tax liability, long term	$	22,461		$	22,520

At the end of each interim reporting period, the Company estimates the effective income tax rate to apply for the full fiscal year. The Company uses the effective income tax rate determined to provide for income taxes on a year-to-date basis and reflects the tax effect of any tax law changes and certain other discrete events in the period in which they occur.

The overall effective income tax rate, as a percentage of pre-tax ordinary income for the six months ended October 31, 2014 and October 31, 2013 was 35.05% and 36.36%, respectively. The Company’s annual effective tax rate may change due to a number of factors including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-tax income, the Company’s geographic profit mix between tax jurisdictions, new tax laws, new interpretations of existing tax laws and rulings by and settlements with tax authorities. The fluctuation in the effective income tax rate during fiscal 2015 is primarily attributable to the excess income tax accruals in past years that were resolved upon completion of the prior NYC and IRS audits and an increase in the dividends received deduction.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate to pretax income as a result of the following:

	Six Months Ended October 31,
	2014			2013
U.S. statutory federal rate		35.00	%		35.00	%
Increase (decrease) in tax rate from:
State and local income taxes, net of federal income tax benefit		2.27	%		2.23	%
Effect of dividends received deductions		-0.29	%		-0.35	%
Domestic production tax credit		-0.65	%		-0.40	%
Other, net		-1.28	%		-0.12	%
Effective income tax rate		35.05	%		36.36	%

The Company believes that, as of October 31, 2014, there were no material uncertain tax positions that would require disclosure under GAAP.

The Company is included in the consolidated federal income tax return of the Parent. The Company has a tax sharing agreement which requires it to make tax payments to the Parent equal to the Company’s liability/(benefit) as if it filed a separate return.

The Company’s federal income tax returns (included in the Parent’s consolidated returns) and state and city tax returns for fiscal years 2013, 2012, and 2011 are subject to examination by the tax authorities, generally for three years after they were filed with the tax authorities. During May 2014, New York City concluded its examination of the Company’s income tax returns for the three years through fiscal year 2011, which resulted in no changes that had any adverse effect on the Company’s financial statements. The Company’s tax returns for the fiscal years ended April 30, 2013 and 2012 are being examined by the Internal Revenue Service (IRS) and by New York City. The Company does not expect the audit examinations to have a material effect on its financial statements.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References+ Details