Provision for Income Taxes

12 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Provision for Income Taxes

Note 7. Provision for Income Taxes

A summary of the components of the provision for income taxes for the years ended June 30, 2014 and 2013 is as follows:

	2014		2013
Current tax expense - federal	$	113,245	$	2,293,795
Current tax expense - state		1,500		32,608
Deferred tax expense (benefit)		183,319		(22,641	)
Provision for income taxes	$	298,064	$	2,303,762

Deferred income taxes reflect the impact of "temporary differences" between the amount of assets and liabilities for financial reporting purposes and such amounts measured by tax laws and regulations. These "temporary differences" are determined in accordance with ASC 740-10.

The combined U.S. federal and state effective income tax rates of 20.3% and 29.3%, for 2014 and 2013 respectively, differed from the statutory U.S. federal income tax rate for the following reasons:

	2014			2013
U.S. federal statutory income tax rate		34.0	%		34.0	%
Increase (reduction) in rate resulting from:
State franchise tax, net of federal income tax benefit		0.8			0.3
ESOP cost versus Fair Market Value		6.4			1.0
Dividend on allocated ESOP shares		(20.4	)		(3.4	)
Qualified production activities		(0.8	)		(2.9	)
Stock-based compensation		0.1			0.3
Other		0.2			—
Effective tax rate		20.3	%		29.3	%

For the years ended June 30, 2014 and 2013 deferred income tax expense of $183,319 and benefit of $22,641, respectively, result from the changes in temporary differences for each year. The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities as of June 30, 2014 and 2013 are presented as follows:

	2014			2013
Deferred tax assets:
Accrued expenses	$	266,255		$	348,085
ESOP		116,981			121,315
Stock-based compensation		23,854			19,946
Inventory - effect on uniform capitalization		32,749			49,032
Other		1,191			2,252
Total deferred tax assets	$	441,030		$	540,630
Deferred tax liabilities:
Unrealized (loss) gain on investment securities		(773	)		222
Property, plant and equipment - principally due
to differences in depreciation methods		400,419			316,700
Total deferred tax liabilities		399,646			316,922
Net deferred tax asset	$	41,384		$	223,708

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 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 reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projection for future taxable income over the period in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these temporary differences without consideration of a valuation allowance.

As the result of the implementation of the FASB interpretation ASC 740-10, Accounting for Uncertainty in Income Taxes – An Interpretation of ASC 740, the Company recognized no material adjustments to unrecognized tax benefits. As of June 30, 2014 and 2013, the Company has no unrecognized tax benefits.

The Company recognizes interest and penalties related to uncertain tax positions, if any, in general and administrative expense. As of June 30, 2014, the Company has not recorded any provision for accrued interest and penalties related to uncertain tax positions.

By statute, tax years ended June 30, 2014, 2013, 2012, and 2011 remain open to examination by the major taxing jurisdictions to which the Company is subject.