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Note 10 - Income Taxes
 3 Months Ended
Sep. 30, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 10. INCOME TAXES

 

The Company and its non-Canadian subsidiaries file a consolidated U.S. federal income tax return. USCAN files a separate tax return in Canada. Provisions for income taxes include deferred taxes for temporary differences between the financial reporting and tax basis of assets and liabilities, resulting from the use of the liability method of accounting for income taxes.

 

Income tax expense for the quarter is based upon the estimated annual ordinary income in each jurisdiction in which the Company operates. The tax effects of discrete items are recognized in the tax provision in the period they occur in accordance with U.S. GAAP. Due to various factors, such as the item’s significance in relation to total ordinary income and the rate of tax, discrete items in any quarter can materially impact the reported effective tax rate ("ETR"). The effective tax rate was 18.3 percent for the three months ended September 30, 2025, and 27.8 percent for the three months ended September 30, 2024.

 

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax amount will not be realized. There was no valuation allowance included at  September 30, 2025, or at  June 30, 2025.

 

The Company maintains a reserve for uncertain tax positions for income tax matters. As of September 30, 2025, and June 30, 2025, the total reserve for uncertain tax positions, including $362,000 and $421,000 of accrued interest and penalties, respectively, and net of federal benefits, was $821,000 and $891,000, respectively. These amounts are included within long-term liabilities on the Consolidated Balance Sheets. The Company believes the reserve balance as of September 30, 2025, including interest and penalties and net of federal benefits, adequately covers open tax years and uncertain tax positions for major taxing jurisdictions. If recognized, the entire $821,000 of unrecognized tax benefits would impact the Company's effective income tax rate. 

 

On July 4, 2025, President Trump signed into law Public Law 119-21, commonly known as the One Big Beautiful Bill Act (the “Act”), which contained several tax reform proposals. A Company is required to adjust current and deferred tax liabilities and assets for the effects of changes in tax laws or rates in income from continuing operations in the interim period that includes the enactment date. The impact of the Act is reflected in the Company’s interim results for the period ended September 30, 2025, and there was no material impact to income tax expense.