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Note 8 - Federal, State and Local Income Taxes | 3 Months Ended
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Jul. 31, 2024
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
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) |  | 2024 |  |  | 2023 |
Current tax expense: |  |  |  |  |  |  |  |
Federal |  | $ | 1,283 |  |  | $ | 1,209 |
State and local |  |  | 312 |  |  |  | 251 |
Current tax expense |  |  | 1,595 |  |  |  | 1,460 |
Deferred tax expense (benefit): |  |  |  |  |  |  |  |
Federal |  |  | 304 |  |  |  | 40 |
State and local |  |  | 11 |  |  |  | - |
Deferred tax expense (benefit): |  |  | 315 |  |  |  | 40 |
Income tax provision |  | $ | 1,910 |  |  | $ | 1,500 |
On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act (the "Tax Act"), was enacted. The Tax Act lowered the U.S. federal income tax rate ("Federal Tax Rate") from 35% to 21% effective January 1, 2018. Accordingly, the Company computes Federal income tax expense using the Federal Tax Rate of 21% in fiscal year 2019 and each year thereafter.
The overall effective income tax rates, as a percentage of pre-tax ordinary income for the three months ended July 31, 2024 and July 31, 2023 were 24.50% and 23.87%, respectively. The higher effective tax rate during three months ended July 31, 2024 as compared to July 31, 2023, is primarily a result of a increase in the state and local income tax rate to 3.69% from 3.10% due to changes in state and local income tax allocations. The Company's annualized overall effective tax rate fluctuates due to a number of factors, in addition to changes in tax law, including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-income tax, the Company's geographic profit mix between tax jurisdictions, taxation method adopted by each locality, new interpretations of existing tax laws and rulings and settlements with tax authorities.
Deferred income taxes, a liability, 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 long-term deferred tax liability are as follows:
|  | July 31, |  |  | April 30, |
($ in thousands) |  | 2024 |  |  | 2024 |
Federal tax liability (benefit): |  |  |  |  |  |  |  |
Deferred gain on deconsolidation of EAM |  | $ | 10,669 |  |  | $ | 10,669 |
Deferred non-cash post-employment compensation |  |  | (372 | ) |  |  | (372 | )
Depreciation and amortization |  |  | 67 |  |  |  | 73 |
Unrealized gain/(loss) on securities held for sale |  |  | 1,162 |  |  |  | 916 |
Right of Use Asset |  |  | (138 | ) |  |  | (128 | )
Deferred charges |  |  | (54 | ) |  |  | (138 | )
Other |  |  | (578 | ) |  |  | (424 | )
Total federal tax liability |  |  | 10,756 |  |  |  | 10,596 |
State and local tax liabilities (benefits): |  |  |  |  |  |  |  |
Deferred gain on deconsolidation of EAM |  |  | 2,385 |  |  |  | 2,073 |
Deferred non-cash post-employment compensation |  |  | (83 | ) |  |  | (72 | )
Depreciation and amortization |  |  | 15 |  |  |  | 13 |
Unrealized gain/(loss) on securities held for sale |  |  | 259 |  |  |  | 178 |
Other |  |  | (193 | ) |  |  | 105 |
Total state and local tax liabilities |  |  | 2,383 |  |  |  | 2,297 |
Deferred tax liability, long-term |  | $ | 13,139 |  |  | $ | 12,893 |
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 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, |
|  | 2024 |  |  | 2023 |
U.S. statutory federal tax rate |  |  | 21.00 | % |  |  | 21.00 | %
Increase (decrease) in tax rate from: |  |  |  |  |  |  |  |
State and local income taxes, net of federal income tax benefit |  |  | 3.69 | % |  |  | 3.10 | %
Effect of dividends received deductions |  |  | (0.19 | )% |  |  | (0.24 | )%
Other, net |  |  | - |  |  |  | 0.01 | %
Effective income tax rate |  |  | 24.50 | % |  |  | 23.87 | %
The Company believes that, as of July 31, 2024, 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. Beginning with the fiscal year ended April 30, 2017, the Company files combined income tax returns with the Parent on a unitary basis in certain states.
The Company’s federal income tax returns (included in the Parent’s consolidated returns) and state and city tax returns for fiscal years ended 2021 through 2023, are subject to examination by the tax authorities, generally for three years after they are filed with the tax authorities.

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