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Income Taxes | 12 Months Ended
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Jun. 30, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | (12) Income Taxes The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized. As of June 30, 2018 and 2017, the Company had established a full valuation allowance against all of its net deferred tax assets. For the fiscal year ended June 30, 2018, the Company incurred losses from operations in the amount of $13.3 million. The total effective tax rate is approximately 0% for the fiscal year. There is no current state tax expense. FASB ASC 740, Income Taxes addresses the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return. The Company had no unrecognized tax benefit for the years ended June 30, 2018 and 2017. The Tax Cuts and Jobs Act was enacted on December 22, 2017. The Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. In the second quarter, the Company revised its estimated annual effective rate to reflect a change in its federal statutory rate from 35% to 21%. The rate change is effective on January 1, 2018; therefore, the Company’s blended statutory tax rate for the fiscal year ended June 30, 2018 is 28%. The Company’s tax asset was evaluated at 21%. At June 30, 2018, the Company has not completed its accounting for all of the tax effects of enactment of the Act; however, a reasonable estimate has been made. Note that the Company currently has net operating loss carryovers. A valuation allowance has been recorded to fully reserve for net operating loss carryovers, other carryovers, and book/tax differences on the balance sheet. For the years ended June 30, 2018 and 2017, the Company’s effective tax rate differed from the federal statutory rate of 28% and 35% respectively, primarily due to the valuation allowance placed against its net deferred tax assets. Loss carryovers are generally subject to modification by tax authorities until three years after they have been utilized. The components of income tax expense from operations are as follows (in thousands):
|  | Year Ended June 30, |
|  | 2018 |  |  | 2017 |
Current |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |
State and local |  |  | — |  |  |  | (2 | )
Total income tax expense |  | $ | — |  |  | $ | (2 | )
A reconciliation of the reported income tax expense to the amount that would result by applying the U.S. Federal statutory rate to the loss before income taxes to the actual amount of income tax expense recognized follows (in thousands):
|  | Year Ended June 30, |
|  | 2018 |  |  | 2017 |
Expected benefit |  | $ | 3,647 |  |  | $ | 3,996 |
State tax expense |  |  | — |  |  |  | (2 | )
Change in temporary tax adjustments |  |  | (3,608 | ) |  |  | (3,905 | )
Other permanent items |  |  | (39 | ) |  |  | (91 | )
Total income tax expense |  | $ | — |  |  | $ | (2 | )
The impact of the change in tax rate due to the tax reform had an effect of $858 thousand and it was offset by the change in the valuation allowance. The Company’s deferred tax assets as of June 30, 2018 and 2017 consist of the following (in thousands):
|  | Year Ended June 30, |
|  | 2018 |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 15,976 |  |  | $ | 20,439 |
Alternative minimum tax credit carryforwards |  |  | 857 |  |  |  | 857 |
Accrued expenses and other timing |  |  | 983 |  |  |  | 1,344 |
Total gross deferred tax assets |  | $ | 17,816 |  |  | $ | 22,640 |
Less — valuation allowance |  |  | (17,518 | ) |  |  | (22,195 | )
Net deferred tax assets |  | $ | 298 |  |  | $ | 445 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment, principally due to differences in depreciation |  | $ | (298 | ) |  | $ | (445 | )
Total gross deferred tax liabilities |  |  | (298 | ) |  |  | (445 | )
Net deferred tax assets (liabilities) |  | $ | — |  |  | $ | — |
The Company files consolidated returns for federal, Florida, and Texas income and franchise taxes. In assessing the need for a valuation allowance, management considers whether it is more likely than not that some portion or all of the net deferred tax assets will be utilized to offset future tax liabilities. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of June 30, 2018, the Company provided a full valuation allowance of approximately $17.5 million against its net deferred tax assets. The valuation allowance decreased by approximately $4.7 million for the year ended June 30, 2018. Since the Company reflects a full valuation allowance against its deferred tax assets, there has been no income tax impact from these changes. At June 30, 2018, the Company had net operating loss carryforwards of approximately $69.0 million ($14.5 million, tax effected) for federal income tax purposes that are available to offset future regular taxable income. These net operating loss carryforwards expire between the years 2021 and 2037. Utilization of some of these net operating losses is limited due to the changes in stock ownership of the Company associated with the October 2007 Exchange Offer; as such, the benefit from these losses may not be realized. At June 30, 2018, the Company also has accumulated state net operating loss carryforwards of approximately $35.7 million ($1.5 million, tax effected) that are available to offset future state taxable income. These net operating loss carryforwards expire between the years 2031 and 2037. These losses may also be subject to utilization limitations; as such, the benefit from these losses may not be realized. The Company has a temporary credit for business loss carryovers that may be utilized to offset its Texas margin tax. At June 30, 2018, the credit amount is $0.5 million ($0.3 million, tax effected). These credits may be used to offset $39 thousand of state tax liability each year and will expire in 2027. At June 30, 2018, the Company has $0.9 million of alternative minimum tax credit carryforwards available to offset future regular tax liabilities. Uncertain Tax Positions The Company had no uncertain tax positions at June 30, 2018 and 2017. The Company recognizes interest and penalties related to income tax matter in income tax expense. For the years ended June 30, 2018 and 2017, the Company did not recognize any interest expense for uncertain tax positions.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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