Provision for Income Taxes

12 Months Ended

Jun. 30, 2016

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, 2016 and 2015 is as follows:

	2016			2015
Current tax expense - federal	$	1,230,367		$	1,402,033
Current tax (benefit) - state		(1,396	)		(20,386	)
Deferred tax expense (benefit)		57,735			(66,958	)
Provision for income taxes	$	1,286,706		$	1,314,689

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 28.8% and 29.2%, for 2016 and 2015 respectively, differed from the statutory U.S. federal income tax rate for the following reasons:

	2016			2015
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
ESOP cost versus Fair Market Value		1.5			1.5
Dividend on allocated ESOP shares		(3.2	)		(6.7	)
Qualified production activities		(2.7	)		(2.7	)
Stock-based compensation		(0.2	)		(0.3	)
Other		(0.6	)		3.3
Effective tax rate		28.8	%		29.2	%

For the years ended June 30, 2016 and 2015 deferred income tax expense (benefit) of $57,735 and ($66,958), 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, 2016 and 2015 are presented as follows:

	2016			2015
Deferred tax assets:
Accrued expenses	$	151,210		$	295,673
ESOP		90,072			102,355
Stock-based compensation		74,287			23,602
Inventory - effect on uniform capitalization		27,266			12,407
Unrealized (gain)/loss on investment securities		(513	)		2,361
Other		308			638
Total deferred tax assets	$	342,630		$	437,036
Deferred tax liability:
Property, plant and equipment - principally due
to differences in depreciation methods	$	293,309		$	327,106
Total deferred tax liability		293,309			327,106
Net deferred tax asset	$	49,321		$	109,930

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 of June 30, 2016 and 2015, 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, 2016, the Company has not recorded any provision for accrued interest and penalties related to uncertain tax positions.

By federal and state tax statue, federal and state tax returns are subject to audit for three years from date of filing, unless the return was audited within that period. As such, federal returns for tax years ending June 30, 2016, 2015, 2014, and 2013 remain open to examination by the IRS. State returns for tax years ending June 30, 2016, 2015 and 2014 remain open to examination by the State of New York.