v3.8.0.1

Income Taxes

9 Months Ended

Mar. 31, 2018

Income Taxes [Abstract]

INCOME TAXES

Note 12. INCOME TAXES

On December 22, 2017, the “Tax Cuts and Jobs Act” (the “Act”) was enacted. Under the provisions of the Act, the U.S. corporate tax rate decreased from 35% to 21%. Since the Company has a June 30 fiscal year-end, a blended U.S. statutory federal rate of approximately 28% for the fiscal year ending June 30, 2018 is applied to the provision for income tax, and a 21% for subsequent fiscal years.

The Company re-measured certain deferred tax assets based on blended rate of 28% at which these deferred tax amounts are expected to reverse in the future and the re-measurement resulted in a tax expense of $120,400 being recognized during the three months ended March 31, 2018.

In addition, the Company recorded a provisional amount for its one-time transition tax for all of its foreign subsidiaries, resulting in an increase in income tax expense of approximately $478,000 for the nine months ended March 31, 2018. The one-time transition tax was calculated using the Company’s total post-1986 overseas earnings and profits which amounted to approximately $5.7 million. The one-time transition tax is taxed at the rate of 15.5% for the Company’s cash and cash equivalents and 8% for the other assets and is to be paid over 8 years.

The Company’s income tax benefit (expense) for the three and nine months ended March 31, 2018 and 2017 are as follows:

		For the three months ended March 31,								For the nine months ended March 31,
		2018				2017				2018				2017
Current
USA		$	-			$	-			$	(60,162	)		$	-
Hong Kong			6,250				(36,966	)			(3,172	)			(71,067	)
China			(69,345	)			(47,738	)			(320,270	)			(158,649	)
One-time transition tax on accumulated foreign earnings			-				-				(478,499	)			-
			(63,095	)			(84,704	)			(862,103	)			(229,716	)
Deferred
USA			(153,000	)			387,900				920,700				387,900
Total income tax benefit (expense)		$	(216,095	)		$	303,196			$	58,597			$	158,184

The Company recorded income tax expense of $216,095 and benefit of $303,196 in the three months ended March 31, 2018 and 2017. The Company recorded income tax benefit of $58,597 and $158,184 in the nine months ended March 31, 2018 and 2017, respectively.

The Company’s deferred tax assets are comprised of the following:

		March 31,				June 30,
		2018				2017
Allowance for doubtful accounts		$	568,000			$	106,000
Stock-based compensation			687,000				790,000
Net operating loss			1,068,000				1,464,000
Total deferred tax assets			2,323,000				2,360,000
Valuation allowance			(652,900	)			(1,610,600	)
Deferred tax assets, net - long-term		$	1,670,100			$	749,400

The Company’s operations in the U.S. for federal tax purposes have incurred a cumulative net operating loss (“NOL”) of approximately $5,250,000 as of March 31, 2018, which may reduce federal future taxable income. For the three and nine months ended March 31, 2018, approximately $317,000 and $954,000 of NOL was utilized, respectively.

The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. The Company considers many factors when assessing the likelihood of future realization of the deferred tax assets, including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes, and other relevant factors. Management has provided an allowance against the deferred tax assets balance as of March 31, 2018. The net increase in the valuation allowance for the three months ended March 31, 2018 amounted to $140,000 and the net decrease in the valuation allowance for the nine months ended March 31, 2018 amounted to $957,700, respectively on the basis of management’s reassessment of the amount of its deferred tax assets that are more likely than not to be realized. Management considers new evidence, both positive and negative, that could affect its future realization of deferred tax assets. Due to enactment of the Act, NOL could be carried forward indefinitely and the Company has pretax income resulting in utilization of NOL in the current period, management determined that there is sufficient positive evidence to conclude that it is more likely than not that all of its NOL are realizable.

The Company’s taxes payable consists of the following:

		March 31,				June 30,
		2018				2017
VAT tax payable		$	558,452			$	520,436
Corporate income tax payable			2,213,939				1,290,832
Others			69,762				74,948
Total			2,842,153				1,886,216
Less: current portion			2,401,934				1,886,216
Income tax payable - noncurrent portion		$	440,219			$	-

X

- References

No definition available.

+ Details

Name:	us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- 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/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

+ Details

Name:	us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration