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Income Taxes | 9 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Note 7. Income Taxes The Company recorded an income tax expense of approximately $3.0 million for the three months ended December 31, 2022 compared to an income tax benefit of approximately $209 thousand for the three months ended December 31, 2021. The Company’s effective tax rate decreased to -29.1% for the three months ended December 31, 2022 from 22.9% for the three months ended December 31, 2021. The Company recorded an income tax expense of approximately $1.4 million for the nine months ended December 31, 2022 compared to an income tax expense of approximately $926 thousand for the nine months ended December 31, 2021. The Company’s effective tax rate decreased to -8.42% for the nine months ended December 31, 2022 from 26.0% for the nine months ended December 31, 2021. The lower effective tax rate for the three months ended December 31, 2022 and the lower effective tax rate for the nine months ended December 31, 2022 were attributed to a deferred income tax valuation allowance of $5.7 million recorded during the three months ended December 31, 2022. The net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes are reflected in deferred income taxes. Significant components of the Company’s deferred tax assets consist of the following:
|  | (In thousands) |
|  | December 31, 2022 |  |  | March 31, 2022 |
Deferred Tax Assets: |  |  |  |  |  |
Federal and State net operating loss carryforwards |  | $ | 2,365 |  |  | $ | 507 |
Share-based compensation |  |  | 14 |  |  |  | 79 |
Allowance for credit losses not currently deductible for tax purposes |  |  | 2,998 |  |  |  | 900 |
Right of use liability |  |  | 675 |  |  |  | 1,094 |
Other items |  |  | 119 |  |  |  | 175 |
Gross deferred tax assets |  |  | 6,171 |  |  |  | 2,755 |
Valuation allowance for deferred tax assets |  |  | (5,723 | ) |  |  | - |
Net deferred tax assets |  |  | 448 |  |  |  | 2,755 |
Deferred tax liabilities: |  |  |  |  |  |
Right of use asset |  |  | 290 |  |  |  | 1,061 |
Other items |  |  | 158 |  |  |  | 309 |
Total deferred tax liabilities |  |  | 448 |  |  |  | 1,370 |
Net deferred income taxes |  | $ | - |  |  | $ | 1,385 |
Income tax expense reflects an effective U.S tax rate, which differs from the corporate tax rate for the following reasons:
|  | (In thousands) |
|  | Three months ended |  |  | Nine months ended |
|  | December 31, 2022 |  |  | December 31, 2022 |
Income tax expense at Federal statutory rate |  | $ | (2,178 | ) |  | $ | (3,530 | )
State income taxes, net of Federal benefit |  |  | (398 | ) |  |  | (645 | )
Increase (decrease) resulting from: |  |  |  |  |  |
Change in Valuation Allowance |  |  | 5,723 |  |  |  | 5,723 |
Other |  |  | (147 | ) |  |  | (133 | )
Income tax expense |  | $ | 3,000 |  |  | $ | 1,415 |
As of December 31, 2022 the Company has not generated sufficient positive evidence of future earnings to support a position that it will be able to realize its net deferred tax asset. The Company has significant negative evidence to overcome in the form of cumulative pre-tax losses from continuing operations as well as projected losses for the current year. Therefore, it will continue to maintain a full valuation allowance on its U.S. federal and state net deferred tax asset. The change in the valuation allowance offset the income tax benefit related to the pre-tax loss for the quarter ended December 31, 2022. The Company does no t have any material unrecognized tax benefits as of December 31, 2022. The Company experienced a net change in valuation allowance of $5.7 million for the three and nine months ended December 31, 2022.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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