Income Taxes

The sources of pretax income (loss) are as follows:



	Twelve Months Ended
	June 30, 2017			June 30, 2016		June 30, 2015
	(In thousands)
Domestic	$	19,763		$	33,986	$	(4,001	)
Foreign	(17,317		)	5,667		12,193
Total	$	2,446		$	39,653	$	8,192

For fiscal 2017, 2016 and 2015, domestic pretax income included a gain of $0.3 million and losses of $3.3 million and $19.1 million, respectively, related to our acquired EPC joint venture project. The Company consolidates the acquired EPC joint venture project and reports a noncontrolling interest. Accordingly, the Company's pretax income includes the noncontrolling interest holder's share of the acquired EPC project loss for which the Company does not receive a tax benefit.

The components of the provision for income tax expense (benefit) are as follows:



	Twelve Months Ended
	June 30, 2017			June 30, 2016			June 30, 2015
	(In thousands)
Current:
Federal	$	6,522		$	9,930		$	7,535
State	(185		)	2,570			1,606
Foreign	(1,509		)	(262		)	1,791
	4,828			12,238			10,932
Deferred:
Federal	618			887			1,803
State	101			67			(362		)
Foreign	(3,239		)	924			(2,283		)
	(2,520		)	1,878			(842		)
	$	2,308		$	14,116		$	10,090

The difference between the expected income tax provision applying the domestic federal statutory tax rate and the reported income tax provision is as follows:



	Twelve Months Ended
	June 30, 2017			June 30, 2016			June 30, 2015
	(In thousands)
Expected provision for Federal income taxes at the statutory rate	$	857		$	13,879		$	2,868
State income taxes, net of Federal benefit	808			1,827			1,023
Deemed foreign dividends	—			—			1,462
Charges without tax benefit	1,741			2,187			1,478
Change in valuation allowance	1,295			311			25
Excess tax benefits on stock-based compensation⁽¹⁾	(496		)	—			—
IRC S199 deduction	(749		)	(999		)	—
Foreign tax credits	—			—			(1,433		)
Research and development and other tax credits	(1,626		)	(1,928		)	(1,197		)
Foreign tax differential	1,496			(815		)	(529		)
Noncontrolling interest	(112		)	1,164			6,669
Change in uncertain tax positions	(22		)	(569		)	—
Adjustment to tax accounts	(924		)	(786		)	—
Other	40			(155		)	(276		)
Provision for income taxes	$	2,308		$	14,116		$	10,090

(1)

This represents the amount recognized for excess tax benefits upon the vesting or exercise of nonvested deferred share awards and stock options, respectively, for which the Company expects to receive an income tax deduction. Upon the adoption of ASU 2016-09, excess tax benefits and tax deficiencies are recognized as part of the provision for income taxes. See Note 1 - Summary of Significant Accounting Policies, Recently Issued Accounting Standards, ASU 2016-09, for more information about the new accounting standard.

Significant components of the Company’s deferred tax assets and liabilities are as follows:



	June 30, 2017			June 30, 2016
	(In thousands)
Deferred tax assets:
Warranty reserve	$	312		$	195
Bad debt reserve	3,869			3,188
Paid-time-off accrual	821			865
Insurance reserve	2,284			2,461
Legal reserve	82			87
Net operating loss benefit and credit carryforwards	9,332			8,207
Valuation allowance	(1,719		)	(424		)
Accrued compensation and pension	1,346			1,268
Stock compensation expense on nonvested deferred shares	3,731			3,472
Accrued losses	340			274
Foreign currency translation and other	1,080			1,041
Total deferred tax assets	21,478			20,634
Deferred tax liabilities:
Tax over book depreciation	11,446			11,504
Tax over book amortization	3,325			2,588
Branch future liability	2,538			2,889
Prepaid insurance	—			396
Receivable holdbacks and other	912			2,736
Total deferred tax liabilities	18,221			20,113
Net deferred tax asset	$	3,257		$	521

As reported in the consolidated balance sheets:



	June 30, 2017			June 30, 2016
	(In thousands)
Deferred income tax assets	3,385			3,719
Deferred income tax liabilities	(128		)	(3,198		)
Net deferred tax asset	$	3,257		$	521

The Company has state net operating loss carryforwards, state tax credit carryforwards, federal foreign tax credit carryforwards, foreign net operating loss carryforwards and foreign tax credit carryforwards. The valuation allowance at June 30, 2017 and June 30, 2016 reduces the recognized tax benefit of these carryforwards to an amount that is more likely than not to be realized. These carryforwards will generally expire as shown below:



Tax Credit Carryforwards	Expiration Period	Amount (in thousands)
State tax credits	June 2017 to June 2032	$	498
Federal foreign tax credits	June 2018 to June 2024	$	2,348
Foreign tax credits	June 2034 to June 2036	$	612



Operating Loss Carryforwards	Expiration Period	Amount (in thousands)
State net operating losses	June 2022 to June 2037	$	19,015
Foreign net operating losses	December 2028; June 2031 to June 2036	$	15,454

In general, it is the practice and intention of the Company to reinvest the earnings of its foreign subsidiaries in its foreign operations. Such amounts become subject to United States taxation upon the remittance of dividends and under certain other circumstances. As of June 30, 2017, unremitted earnings of foreign subsidiaries, which have been or are intended to be permanently invested, are approximately $1.0 million. We anticipate that any deferred tax liability related to the investment in these foreign subsidiaries could be offset by foreign tax credits.

The Company files tax returns in multiple domestic and foreign taxing jurisdictions. With a few exceptions, the Company is no longer subject to examination by taxing authorities through fiscal 2012. At June 30, 2017, the Company updated its evaluation of its open tax years in all known jurisdictions. Based on this evaluation, the Company did not identify any material uncertain tax positions. We have recorded a $0.6 million liability as of June 30, 2017 for unrecognized tax positions and the payment of related interest and penalties. We treat the related interest and penalties as income tax expense. Due to the uncertainties related to these tax matters, we are unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority will occur.