Provision for Income Taxes

12 Months Ended

Jun. 30, 2015

Provision for Income Taxes [Abstract]

Note 7. Provision for Income Taxes

A summary of the components of the provision for income taxes for the years ended June 30, 2015 and 2014 is as follows:

	2015		2014
Current tax expense - federal	$	1,402,033	$	113,245
Current tax (benefit) expense - state		(20,386)		1,500
Deferred tax (benefit) expense		(66,958)		183,319
Provision for income taxes	$	1,314,689	$	298,064

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 29.2% and 20.3%, for 2015 and 2014 respectively, differed from the statutory U.S. federal income tax rate for the following reasons:

	2015			2014
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		0.1			0.8
ESOP cost versus Fair Market Value		1.5			6.4
Dividend on allocated ESOP shares		(6.7	)		(20.4	)
Qualified production activities		(2.7	)		(0.8	)
Stock-based compensation		(0.3)			0.1
Other		3.3			0.2
Effective tax rate		29.2	%		20.3	%

For the years ended June 30, 2015 and 2014 deferred income tax benefit of $66,958 and deferred income tax expense of $183,319 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, 2015 and 2014 are presented as follows:

	2015		2014
Deferred tax assets:
Accrued expenses	$	295,673	$	266,255
ESOP		102,355		116,981
Stock-based compensation		23,602		23,854
Inventory - effect on uniform capitalization		12,407		32,749
Unrealized loss on investment securities		2,361		773
Other		638		1,191
Total deferred tax assets	$	437,036	$	441,803

Deferred tax liability:
Property, plant and equipment - principally due
to differences in depreciation methods		327,106		400,419
Total deferred tax liability		327,106		400,419
Net deferred tax asset	$	109,930	$	41,384

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, 2015 and 2014, 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, 2015, the Company has not recorded any provision for accrued interest and penalties related to uncertain tax positions.

By federal tax statute, tax years ended June 30, 2015, 2014, 2013, and 2012 remain open to examination by the IRS. By New York state tax law, tax years ended June 30, 2015 and 2014 remain open to examination.