Income Taxes

Income tax expense (benefit) consists of:



	Current		Deferred		Total
Year ended March 31, 2013
U.S. Federal	$	63,140,638	(8,792,012	)	54,348,626
State and local	8,372,748		(857,958	)	7,514,790
Foreign	1,629,695		(1,292,028	)	337,667
	$	73,143,081	(10,941,998	)	62,201,083

Year ended March 31, 2012
U.S. Federal	$	55,179,487	(2,302,615	)	52,876,872
State and local	5,745,452		112,857		5,858,309
Foreign	2,247,933		(1,804,216	)	443,717
	$	63,172,872	(3,993,974	)	59,178,898

Year ended March 31, 2011
U.S. Federal	$	47,303,032	(19,448	)	47,283,584
State and local	4,953,995		(538,793	)	4,415,202
Foreign	2,580,385		(2,279,239	)	301,146
	$	54,837,412	(2,837,480	)	51,999,932

Income tax expense was $62,201,083, $59,178,898 and $51,999,932, for the years ended March 31, 2013, 2012 and 2011, respectively, and differed from the amounts computed by applying the U.S. federal income tax rate of 35% to pretax income from continuing operations as a result of the following:



	2013			2012		2011
Expected income tax	$	58,201,791		55,955,669		50,137,189
Increase (reduction) in income taxes resulting from:
State tax, net of federal benefit	4,884,614			3,807,901		2,869,881
Insurance income exclusion	(123,289		)	(118,656	)	(165,289	)
Uncertain tax positions	283,084			(323,651	)	(1,326,568	)
Foreign income adjustments	(961,771		)	(533,246	)	(284,527	)
Other, net	(83,346		)	390,881		769,246
	$	62,201,083		59,178,898		51,999,932

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 31, 2013 and 2012 are presented below:



	2013			2012
Deferred tax assets:
Allowance for doubtful accounts	$	23,078,422		20,536,315
Unearned insurance commissions	13,190,468			13,206,765
Accounts payable and accrued expenses primarily related to employee benefits	8,021,707			6,260,263
Accrued interest receivable	—			2,903,523
Reserve for uncollectible interest	5,473,804			—
Convertible notes	383,206			563,957
Other	728,658			598,041

Gross deferred tax assets	50,876,265			44,068,864
Less valuation allowance	(1,274		)	(1,274	)
Net deferred tax assets	50,874,991			44,067,590

Deferred tax liabilities:
Fair value adjustment for loans	(13,563,946		)	(17,243,185	)
Property and equipment	(4,134,286		)	(4,397,194	)
Intangible assets	(1,531,635		)	(1,534,837	)
Deferred net loan origination fees	(1,728,710		)	(1,763,007	)
Prepaid expenses	(500,418		)	(654,533	)
Unrealized losses	—			(836	)
Gross deferred tax liabilities	(21,458,995		)	(25,593,592	)

Net deferred tax assets	$	29,415,996		18,473,998

The valuation allowance for deferred tax assets as of March 31, 2013 and 2012 was $1,274. The valuation allowance against the total deferred tax assets as of March 31, 2013 and 2012 relates to state net operating losses. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset, the Company will need to generate future taxable income prior to the expiration of the deferred tax assets governed by the tax code. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowances at March 31, 2013. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

The Company is required to assess whether the earnings of the Company's Mexican foreign subsidiary will be permanently reinvested in the respective foreign jurisdiction or if previously untaxed foreign earnings of the Company will no longer be permanently reinvested and thus become taxable in the United States. If these earnings were ever repatriated to the United States, the Company would be required to accrue and pay taxes on the cumulative undistributed earnings. As of March 31, 2013, the Company has determined that approximately $8.3 million of cumulative undistributed net earnings, as well as the future net earnings, of the Mexican foreign subsidiaries will be permanently reinvested.

As of March 31, 2013 and 2012, the Company had $3.2 million and $2.9 million of total gross unrecognized tax benefits including interest, respectively. Of these totals, approximately $1.6 million and $1.5 million, respectively, represents the amount of unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



Unrecognized tax benefits balance at March 31, 2012	$	2,704,386
Gross increases for tax positions of current year	221,879
Gross increases for tax positions of prior years	—
Federal and state tax settlements	—
Lapse of statute of limitations	(141,174		)
Unrecognized tax benefits balance at March 31, 2013	$	2,785,091

At March 31, 2013, approximately $2.0 million of gross unrecognized tax benefits are expected to be resolved during the next 12 months through settlements with taxing authorities or the expiration of the statute of limitations. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. As of March 31, 2013, the Company had $417,004 accrued for gross interest, of which $240,609 was a current period expense.

The Company is subject to U.S. and Mexican income taxes, as well as various other state and local jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2009, although carryforward attributes that were generated prior to 2009 may still be adjusted upon examination by the taxing authorities if they either have been or will be used in a future period.