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INCOME TAXES | 12 Months Ended
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Jun. 30, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 11 - INCOME TAXES The Company has recorded a deferred tax asset of $7,223,255 and a deferred tax liability of $371,560 as of June 30, 2024, primarily relating to its allowance for credit losses of $3,970,000 and tax credits of approximately $1,323,000 available to offset future taxable income through 2043. During fiscal 2024, the Company utilized all Federal loss carryforwards. In addition the Company has state operating loss carryforwards of approximately $4,516,000 and city operating loss carryforwards of approximately $618,000. The net operating losses begin to expire in 2026 for state income tax purposes. The Company has also recorded a valuation allowance against $2,746,000 of the state operating losses since the Company doesn’t anticipate being able to utilize them. The Company files corporate income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2020. Future ownership changes as determined under Section 382 of the Internal Revenue code could further limit the utilization of net operating loss carryforwards. As of June 30, 2024, no such changes in ownership have occurred. The Inflation Reduction Act (“IRA”) was enacted on August 16, 2022. The IRA includes provisions imposing a 1% excise tax on share repurchases that occur after December 31, 2022 and introduces a 15% corporate alternative minimum tax (“CAMT”) on adjusted financial statement income. The CAMT will be effective for tax years beginning after December 31, 2022. Currently, the IRA did not have a material impact to the Company’s financial statements. The valuation allowance for deferred tax assets decreased during the year ended June 30, 2024, by approximately $171,000. The valuation allowance decreased by approximately $78,000 during the year ended June 30, 2023. Components of the provision for income taxes are as follows:
Schedule of components of the provision for income taxes |  |  |  |
|  | Years Ended June 30,
Current: |  | 2024 |  | 2023
Federal |  | $ | 429,873 |  |  | $ | — |
State |  |  | 1,943,588 |  |  |  | 652,521 |
Subtotal |  |  | 2,373,461 |  |  |  | 652,521 |
Deferred: |  |  |  |  |  |  |  |
Federal deferred taxes |  |  | 2,585,515 |  |  |  | 2,770,980 |
State deferred taxes |  |  | 209,992 |  |  |  | 208,570 |
Subtotal |  |  | 2,795,507 |  |  |  | 2,979,550 |
Provision (Benefit) for Income Taxes - Net |  | $ | 5,168,968 |  |  | $ | 3,632,071 |
A reconciliation of the federal statutory income tax rate to the Company’s effective tax rate as reported is as follows:
Schedule of reconciliation of federal statutory income tax rate to company’s effective tax rate |  |  |  |
|  | Years Ended June 30,
|  | 2024 |  | 2023
Taxes at federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | %
State and local income taxes (benefit), net of federal benefit |  |  | 7.1 | % |  |  | 5.1 | %
Non-controlling interest |  |  | (5.3 | )% |  |  | (4.6 | )%
Expiration of tax credits |  |  | 2.2 | % |  |  | 2.8 | %
Return to provision adjustments |  |  | — | % |  |  | (2.3 | )%
Change in the valuation allowance |  |  | (0.2 | )% |  |  | (0.5 | )%
Other |  |  | 2.0 | % |  |  | 1.5 | %
Effective income tax rate |  |  | 26.8 | % |  |  | 23.0 | %
As of June 30, 2024, the Company utilized all Federal net operating loss (“NOL”) carryforwards as compared to NOL’s of approximately $9,110,000 as of June 30, 2023. The utilization of certain of the NOLs is limited by separate return limitation year rules pursuant to Section 1502 of the Internal Revenue Code. The Company has, for federal income tax purposes, research and development tax credits and investments tax credits carryforwards aggregating $1,323,000. However, the realization of these credits may be limited as a result of expiring prior to their utilization. These credits can only be applied after all net operating losses have been used. Significant components of the Company’s deferred tax assets and liabilities at June 30, 2024 and 2023 are as follows:
Schedule of company’s deferred tax assets and liabilities |  |  |  |  |  |  |  |
|  | June 30,
|  | 2024 |  | 2023
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for credit losses |  | $ | 3,969,819 |  |  | $ | 3,360,809 |
Non-deductible accruals |  |  | 758,700 |  |  |  | 707,400 |
Net operating carryforwards |  |  | 396,092 |  |  |  | 2,768,844 |
Tax credits |  |  | 1,323,018 |  |  |  | 2,981,214 |
Capitalized research and development |  |  | 747,407 |  |  |  | 369,675 |
Right of use assets and lease liabilities |  |  | 114,116 |  |  |  | 112,938 |
Inventories |  |  | 106,879 |  |  |  | 105,310 |
Deferred Tax Assets - gross |  |  | 7,416,031 |  |  |  | 10,406,190 |
Valuation allowance |  |  | (192,776 | ) |  |  | (364,230 | )
Total deferred tax assets |  |  | 7,223,255 |  |  |  | 10,041,960 |
Property and equipment and depreciation |  |  | (267,124 | ) |  |  | (151,007 | )
Intangibles |  |  | (104,436 | ) |  |  | (243,751 | )
Total deferred tax liabilities |  |  | (371,560 | ) |  |  | (394,758 | )
Net deferred tax asset |  | $ | 6,851,695 |  |  | $ | 9,647,202 |

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