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Income Taxes
3 Months Ended
Oct. 31, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

At October 31, 2017 and July 31, 2017, total unrecognized tax benefits were $8,880,000 and $8,681,000, respectively, including interest of $121,000 and $95,000, respectively. At October 31, 2017 and July 31, 2017, $2,550,000 and $2,515,000, respectively, of our unrecognized tax benefits were recorded as non-current income taxes payable in our Condensed Consolidated Balance Sheets. The remaining unrecognized tax benefits of $6,330,000 and $6,166,000 at October 31, 2017 and July 31, 2017, respectively, were presented as an offset to the associated non-current deferred tax assets in our Condensed Consolidated Balance Sheets. Of the total unrecognized tax benefits, $7,875,000 and $7,727,000, at October 31, 2017 and July 31, 2017, respectively, net of the reversal of the Federal benefit recognized as a deferred tax asset relating to state reserves, excluding interest, would positively impact our effective tax rate, if recognized. Unrecognized tax benefits result from income tax positions taken or expected to be taken on our income tax returns for which a tax benefit has not been recorded in our condensed consolidated financial statements. Our policy is to recognize interest and penalties relating to uncertain tax positions in income tax expense.

In November 2017, we received notification from the Internal Revenue Service (“IRS”) that it will audit our Federal income tax return for fiscal 2016. Our Federal income tax return for fiscal 2015 is also subject to potential future IRS audit. None of our state income tax returns prior to fiscal 2013 are subject to audit. TCS’s Federal income tax returns for tax years 2014 and 2015 and the tax period from January 1, 2016 to February 23, 2016 are subject to potential future IRS audit. None of TCS’s state income tax returns prior to calendar year 2013 are subject to audit. The results of the IRS tax audit for fiscal 2016, future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition.