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Income Taxes | 9 Months Ended
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Mar. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | A summary of our total income tax expense and effective income tax rate for the three and nine months ended March 31, 2018 and 2017 is as follows:
|  | Three Months Ended March 31, |  |  | Nine Months Ended March 31, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Income before income taxes |  | $ | 1,043,125 |  |  | $ | 366,598 |  |  | $ | 1,548,646 |  |  | $ | 2,110,587 |
Income tax expense (benefit) |  | $ | (183,154 | ) |  | $ | 265,774 |  |  | $ | (318,678 | ) |  | $ | 771,600 |
Effective income tax rate |  |  | -18 | % |  |  | 72 | % |  |  | -21 | % |  |  | 37 | %
The difference between our effective tax rates in the periods presented above and the federal statutory rate is primarily due to a tax benefit from our domestic losses being recorded with a full valuation allowance, as well as the effect of foreign earnings taxed at rates differing from the U.S. federal statutory rate. As of March 31, 2018, our China operations are subject to statutory income tax rates of 15% and 25% for LPOIZ and LPOI, respectively. During the three months ended December 31, 2017, the statutory tax rate applicable to LPOIZ was lowered from 25% to 15% in accordance with an incentive program for technology companies in China. The lower rate applies to LPOIZ’s 2017 tax year, beginning January 1, 2017. Accordingly, we recorded a tax benefit during the three months ended December 31, 2017 related to this retroactive rate change. For the three months ended March 31, 2018, income taxes were accrued at the applicable rates. Through December 31, 2017, our Latvia operations were subject to a statutory income tax rate of 15%. Effective January 1, 2018, the Republic of Latvia enacted tax reform with the following key provisions: (i) corporations are no longer subject to income tax, but are instead subject to a distribution tax on distributed profits (or deemed distributions, as defined) and (ii) the rate of tax was changed to 20%, however, distribution amounts are first divided by 0.8 to arrive at the profit before tax amount, resulting in an effective tax rate of 25%. Since our intent is to distribute profits from this entity to its parent company in the U.S., we will accrue distribution taxes as profits are generated. With this change, the concept of taxable income and tax basis in assets and liabilities has been eliminated and is no longer relevant for purposes of determining income taxes; therefore, the previously recorded net deferred tax liability related to Latvia was adjusted to zero during the three months ended March 31, 2018, resulting in a tax benefit of approximately $206,000. We record net deferred tax assets to the extent we believe it is more likely than not that these assets will be realized. Based on the level of historical taxable income, we have provided a full valuation allowance against our net deferred tax assets as of March 31, 2018 and June 30, 2017, except for items with indefinite carryover periods. The net deferred tax asset results from federal and state tax credits with indefinite carryover periods that management expects to utilize in a future period. Tax Cuts and Jobs Act In December 2017, the United States (“U.S.”) enacted the Tax Cuts and Jobs Act (the “2017 Act”), which changes existing U.S. tax law and includes various provisions that are expected to affect companies. Among other things, the 2017 Act: (i) changes U.S. corporate tax rates, (ii) generally reduces a company’s ability to utilize accumulated net operating losses, and (iii) requires the calculation of a one-time transition tax on certain foreign earnings and profits (“E&P”) that had not been previously repatriated. In addition, the 2017 Act impacts a company’s estimates of its deferred tax assets and liabilities. Pursuant to U.S. GAAP, changes in tax rates and tax laws are accounted for in the period of enactment, and the resulting effects are recorded as discrete components of the income tax provision related to continuing operations in the same period. We continue to evaluate the impact of the 2017 Act on our financial statements. Based on our initial assessments to date, we expect the one-time transition tax on certain foreign E&P to have a minimal impact on us because we anticipate that we will be able to utilize our existing net operating losses to substantially offset any taxes payable on foreign E&P. Additionally, we expect significant adjustments to our gross deferred tax assets and liabilities; however, we also expect to record a corresponding offset to our estimated full valuation allowance against our net deferred tax assets, which should result in minimal net effect to our provision for income taxes.

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- 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 Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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