NOTE 11 – INCOME TAXES

The Company’s income tax expense amounts for the three months ended April 30, 2015 and 2014 differed from the expected income tax expense amounts computed by applying the federal corporate income tax rate of 35% to income before income taxes for the periods as shown in the table below.


	Three Months Ended April 30,
	2015			2014
Computed expected income tax expense	$	5,499,000		$	2,343,000
State income taxes, net of federal tax benefit		815,000			300,000
Permanent differences, net		(1,436,000	)		(715,000	)
Other, net		(17,000	)		(34,000	)

	$	4,861,000		$	1,894,000

For the three months ended April 30, 2015 and 2014, the favorable income tax effects of permanent differences related primarily to the exclusion from taxable income of the income attributable to noncontrolling interest entities (which are considered partnerships for income tax reporting purposes) and the domestic manufacturing deduction, offset partially by state income taxes.

As of April 30 and January 31, 2015, the amounts presented in the condensed consolidated balance sheets for accrued expenses included accrued income taxes of approximately $3,446,000 and $176,000, respectively. The Company’s condensed consolidated balance sheets as of April 30 and January 31, 2015 included net deferred tax liabilities in the amounts of approximately $881,000 and $1,010,000, respectively. As of April 30, 2015, the Company does not believe that it has any material uncertain income tax positions reflected in its accounts.

The tax effects of temporary differences that gave rise to deferred tax assets and liabilities as of April 30 and January 31, 2015 are presented below:


	April 30,			January 31,
	2015			2015
Assets:
Stock options	$	1,816,000		$	1,649,000
Purchased intangibles		1,106,000			1,132,000
Accrued liabilities		337,000			428,000
Other		283,000			107,000

		3,542,000			3,316,000

Liabilities:
Purchased intangibles	$	(3,048,000	)	$	(2,931,000	)
Construction contracts		(842,000	)		(830,000	)
Property and equipment		(503,000	)		(533,000	)
Other		(30,000	)		(32,000	)

		(4,423,000	)		(4,326,000	)

Net deferred tax liabilities	$	(881,000	)	$	(1,010,000	)

The Company is subject to income taxes in the United States of America and in various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company is no longer subject to federal, state and local income tax examinations by tax authorities for its fiscal years ended on or before January 31, 2011 except for a few exceptions including California where the open period is one year longer.