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INCOME TAXES
 3 Months Ended
Jul. 31, 2025
INCOME TAXES  
INCOME TAXES

16. INCOME TAXES

Provision for income taxes for the three months ended July 31, 2025 and July 31, 2024 consisted of the following (in thousands):

 

Three Months Ended July 31,

 

2025

 

2024

 

Income (Loss) Before Income Taxes

$

(21,443

)

$

21,887

 

Income tax benefit (expense)

 

7,727

 

 

(9,687

)

Effective tax rate

 

36.0

%

 

44.3

%

 

Provision for income taxes for the three months ended July 31, 2025 resulted primarily from estimated domestic and foreign taxes included in the calculation of the effective tax rate.

We maintain a valuation allowance for certain deferred tax assets in the United States and Canada, which management believes are not more likely than not to be realizable in the future. Changes in provision for income taxes resulted primarily from the change in income from continuing operations across various tax jurisdictions.

In the event that we determine the deferred tax assets are realizable based on an assessment of relevant factors, an adjustment to the valuation allowance may increase income in the period such determination is made. The valuation allowance does not impact our ability to utilize the underlying net operating loss carryforwards. We also maintain liabilities for uncertain tax positions.

As of July 31, 2025, we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $13.3 million, of which $11.7 million could be payable in cash. In addition, interest and penalty of $1.0 million could also be payable in cash in relation to unrecognized tax benefits. The total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, is $12.7 million. We account for interest and penalties related to uncertain tax positions as a component of income tax provision. We do not expect to have any significant changes to unrecognized tax benefits during the next twelve months.

The Company recorded an estimated tax true-up to Barnes & Noble Education’s purchase accounting attributed to the Barnes & Noble Education’s IRC Section 382 study performed and the accounting method change filed for its 2024 tax return in the current period.

Barnes & Noble Education

Barnes & Noble Education recorded an income tax benefit of $8.6 million on pre-tax loss of $26.9 million during the three months ended July 31, 2025, which represented an effective income tax rate of 32.1%.

In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. As of July 31, 2025, Barnes & Noble Education determined that it was more likely than not that it would not realize all deferred tax assets and its tax rate for the current fiscal year reflects this determination. Barnes & Noble Education will continue to evaluate this position.