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Income taxes
 3 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income taxes

Note 14 – Income taxes

 

For the three months ended September 30, 2022, as a result of the Company’s inability to establish a reliable estimate for annual effective tax rate, the Company calculated income tax expense using the actual effective tax rate year to date, as opposed to the estimated annual effective tax rate, as provided in Accounting Standards Codification (ASC) 740-270-30-18.

 

The income tax provision for the three months ended September 30, 2022 and 2021 consisted of the following: 

         
   September 30, 2022   September 30, 2021 
Current:          
Federal  $–   $234,629 
State   9,921    108,346 
Foreign   –    – 
Total current income tax provision   9,921    342,975 
Deferred:          
Federal   (169,467)   – 
State   (103,145)   – 
Foreign   (185,105)    – 
Total deferred taxes   (457,717)   – 
           
Total provision for income taxes  $(447,796)   $342,975 

 

The Company is subject to U.S. federal income tax as well as state income tax in certain jurisdictions. The tax years 2018 to 2020 remain open to examination by the major taxing jurisdictions to which the Company is subject. The following is a reconciliation of income tax expenses at the effective rate to income tax at the calculated statutory rates:

         
   September 30, 2022   September 30, 2021 
Statutory tax rate          
Federal   21.00%    21.00% 
State (net of federal benefit)   5.85%    8.84% 
Foreign tax rate difference   3.91%    – 
Impairment loss on goodwill – permanent difference   (17.8%)   – 
Net effect of state income tax deduction and other permanent differences   (3.29%)      (1.97%)
Effective tax rate   9.67%    27.87% 

 

As of September 30, 2022, prepaid income taxes to US tax authorities and income tax payable to Chinese tax authorities was $214,818 and $282,029, respectively. As of June 30, 2022, prepaid income taxes to US tax authorities and income tax payable to Chinese tax authorities was $375,087 and $299,563, respectively.

 

The tax effects of temporary differences which give rise to significant portions of the deferred taxes are summarized as follows: 

         
   September 30,
2022		   June 30,
2022		 
Deferred tax assets          
263A calculation  $215,434   $123,884 
Inventory reserve   106,071    71,026 
State taxes   2,226    45,234 
Accrued expenses   157,794    69,172 
ROU assets / liabilities   110,319    83,738 
Stock-based compensation   99,989    70,266 
Net operating loss   416,933    – 
Others   18,797    7,539 
Total deferred tax assets   1,127,663    470,859 
           
Deferred tax liabilities          
Depreciation   (118,576)   (86,254) 
Intangible assets acquired   (1,280,127)   (1,323,720) 
Total deferred tax liabilities   (1,398,703)   (1,409,974) 
           
Net deferred tax liabilities  $(271,040)  $(939,115)