INCOME TAXES

The components of income tax expense for the years ended March 31 are as follow:



$ in thousands	2015		2014			2013
Income tax expense (benefit):
Current - Federal	$	—	$	(35	)	$	149
Current - State	166		137			179
Total income tax expense (benefit)	$	166	$	102		$	328

There was no income tax expense attributable to equity for the three years ended March 31, 2014.

The following is a reconciliation of the expected Federal income tax rate to the consolidated effective tax rate for the years ended March 31:



	2015					2014					2013
$ in thousands	Amount			Percent		Amount			Percent		Amount			Percent
Statutory Federal income tax expense (benefit)	$	240		34.0	%	$	(250	)	34.0	%	$	337		34.0	%
State and local income tax, net of Federal tax benefit	41			5.8		(16		)	2.1		49			4.9
General business credit	(32		)	(4.6	)	(32		)	4.4		(32		)	(3.3	)
Difference in rates	(1,568		)	(222.4	)	(1,068		)	145.5		—			—
Valuation Allowance	741			105.0		(204		)	27.7		795			80.3
Write off DTA due to Section 382 limitation	—			—		1,132			(154.1	)	(1,363		)	(137.7	)
True-ups/Adjustments	743			103.6		255			(34.7	)	524			53.1
Other	1			2.2		285			(38.8	)	18			1.8
Total income tax expense	$	166		23.6	%	$	102		(13.9	)%	$	328		33.1	%

Carver Federal's operating results includes a $166 thousand tax expense for the fiscal year ended March 31, 2015, which included a $741 thousand change in the valuation allowance. For the fiscal year ended March 31, 2014, the total income tax expense of $102 thousand included a $204 thousand change in the valuation allowance. For the fiscal year ended March 31, 2013, the total income tax expense of $328 thousand included a $795 thousand change in the valuation allowance taken on the Bank's deferred tax assets.

Tax effects of existing temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are included in other assets at March 31 as follows:



$ in thousands	2015			2014
Deferred Tax Assets:
Allowance for loan losses	$	1,681		$	2,373
Deferred loan costs, net	(162		)	193
Nonaccrual loan interest	68			64
Purchase accounting adjustment	23			44
Net operating loss carryforward	17,394			15,181
New markets tax credit	2,207			2,175
Depreciation	977			782
Market value adjustment on HFS loans	464			752
Unrealized loss on available-for-sale securities	448			1,908
Other	947			577
Total Deferred Tax Assets	24,047			24,049
Deferred Tax Liabilities:
Income from affiliate	671			(46		)
Total Deferred Tax Liabilities	671			(46		)
Deferred Tax Assets, net	23,376			24,095
Valuation Allowance	(23,376		)	(24,095		)
Deferred Tax Assets, net of valuation allowance	$	—		$	—

On June 29, 2011, the Company raised $55.0 million of equity. The capital raise triggered a change in control under Section 382 of the Internal Revenue Code. Generally, Section 382 limits the utilization of an entity's net operating loss carryforwards, general business credits, and recognized built-in losses upon a change in ownership. The Company expects to be subject to an annual limitation of approximately $0.9 million. The Company has a net deferred tax asset (“DTA”) of approximately $29.2 million. Based on management's calculations, the Section 382 limitation has resulted in previous reductions of the deferred tax asset of $5.8 million. A full valuation allowance for the remaining net deferred tax asset of $23.4 million has been recorded.

At March 31, 2015, the Company had net operating carryforwards for federal purposes of approximately $33.9 million, for state purposes of approximately $52.7 million and for city purposes of approximately $47.2 million which are available to offset future federal, state and city income and which expire over varying periods from March 2028 through March 2034.

The Company has no uncertain tax positions. The Company and its subsidiaries are subject to federal, New York State and New York City income taxation. The Company is no longer subject to examination by taxing authorities for years before March 31, 2008. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination; with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.