Federal, State and Local Income Taxes

9 Months Ended

Jan. 31, 2015

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 January 31,						Nine Months Ended January 31,
($ in thousands)	2015			2014			2015			2014
Current tax expense:
Federal	$	716		$	949		$	2,668		$	2,003
State and local		9			66			161			140
Current tax expense		725			1,015			2,829			2,143
Deferred tax expense:
Federal		198			(9	)		198			521
State and local		(129	)		20			(65	)		111
Deferred tax expense		69			11			133			632
Income tax provision:	$	794		$	1,026		$	2,962		$	2,775

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:


	January 31,			April 30,
($ in thousands)	2015			2014
Federal tax benefit (liability):
Unrealized gains on securities available-for-sale	$	(116	)	$	(134	)
Operating lease deferred obligation		70			70
Deferred professional fees		33			36
Deferred charges		247			327
Total federal tax benefit		234			299

State and local tax benefits:
Other		45			65
Total state and local tax benefits		45			65
Deferred tax asset, short term	$	279		$	364

	January 31,			April 30,
($ in thousands)	2015			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		2,474			2,416
Other		548			646
Total federal tax liability		20,082			20,122

State and local tax liabilities (benefits):
Deferred gain on deconsolidation of EAM		1,942			2,181
Deferred non-cash post-employment compensation		(68	)		(76	)
Depreciation and amortization		271			298
Deferred professional fees		(43	)		(5	)
Other		39			-
Total state and local tax liabilities		2,141			2,398
Deferred tax liability, long term	$	22,223		$	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 nine months ended January 31, 2015 and January 31, 2014 was 32.35% and 35.30%, 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 writeoff of the tax bases of goodwill, effect of the reduction in the allocation factors on the state and local deferred tax liability (primarily the gain on deconsolidation of EAM), reversal of excess income tax accruals established in past years that were resolved upon completion of the prior NYC and IRS audits and an increase in the domestic production tax credits.

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:

	Nine Months Ended January 31,
	2015			2014
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		0.09	%		1.97	%
Effect of dividends received deductions		-0.36	%		-0.42	%
Domestic production tax credit		-0.62	%		-0.46	%
Writeoff of goodwill		-1.85	%		0.00	%
Other, net		0.09	%		-0.79	%
Effective income tax rate		32.35	%		35.30	%

The Company believes that, as of January 31, 2015, 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 (NYC). 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.

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