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Federal, State and Local Income Taxes

3 Months Ended

Jul. 31, 2015

Income Tax Disclosure [Abstract]

Federal, State and Local Income Taxes

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 July 31,
($ in thousands)		2015				2014
Current tax expense:
Federal		$	1,024			$	869
State and local			72				90
Current tax expense			1,096				959
Deferred tax expense:
Federal			(12	)			106
State and local			(151	)			24
Deferred tax expense			(163	)			130
Income tax provision:		$	933			$	1,089

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:


($ in thousands)		July 31, 2015				April 30, 2015
Federal tax benefit (liability):
Unrealized gains on securities available-for-sale		$	(7	)		$	(57	)
Operating lease deferred obligation			70				70
Deferred professional fees			76				34
Deferred charges			229				263
Total federal tax benefit			368				310

State and local tax benefits:
Other			36				46
Total state and local tax benefits			36				46
Deferred tax asset, short term		$	404			$	356


($ in thousands)		July 31, 2015				April 30, 2015
Federal tax liability (benefit):
Deferred gain on deconsolidation of EAM		$	17,705			$	17,679
Deferred non-cash post-employment compensation			(619	)			(619	)
Depreciation and amortization			2,418				2,435
Other			448				401
Total federal tax liability			19,952				19,896

State and local tax liabilities (benefits):
Deferred gain on deconsolidation of EAM			1,735				1,970
Deferred non-cash post-employment compensation			(61	)			(69	)
Depreciation and amortization			237				271
Deferred professional fees			(7	)			(4	)
Total state and local tax liabilities			1,904				2,168
Deferred tax liability, long term		$	21,856			$	22,064

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 rates, as a percentage of pre-tax ordinary income for the three months ended July 31, 2015 and July 31, 2014 were 30.57% and 34.86%, respectively. The Company’s annual effective tax rate will 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 and settlements with tax authorities. The fluctuation in the effective income tax rate during fiscal 2016 is primarily attributable to the effect from the scheduled reduction in the allocation factors on the state and local current and deferred tax liability (primarily the gain on deconsolidation of EAM), dividend exclusion 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:


		Three Months Ended July 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			-3.57	%			2.37	%
Effect of dividends received deductions			-0.32	%			-0.29	%
Domestic production tax credit			-0.63	%			-0.65	%
Other, net			0.09	%			-1.57	%
Effective income tax rate			30.57	%			34.86	%

The Company believes that, as of July 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 2014, 2013, and 2012, are subject to examination by the tax authorities, generally for three years after they were filed with the tax authorities. 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.