Provision for Income Taxes

12 Months Ended

Jun. 30, 2017

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, 2017 and 2016 is as follows:

	2017			2016
Current tax expense - federal	$	559,171		$	1,230,367
Current tax expense (benefit) - state		2,986			(1,396	)
Deferred tax (benefit) expense		(46,488	)		57,735
Provision for income taxes	$	515,669		$	1,286,706

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 31.2% and 28.8%, for 2017 and 2016 respectively, differed from the statutory U.S. federal income tax rate for the following reasons:

	2017			2016
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		3.6			1.5
Dividend on allocated ESOP shares		(7.2	)		(3.2	)
Qualified production activities		(2.8	)		(2.7	)
Stock-based compensation		1.8			(0.2	)
Other		1.7			(0.6	)
Effective tax rate		31.2	%		28.8	%

For the years ended June 30, 2017 and 2016 deferred income tax (benefit) expense of ($46,488) and $57,735, respectively, results 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, 2017 and 2016 are presented as follows:

	2017		2016
Deferred tax assets:
Accrued expenses	$	195,915	$	151,210
ESOP		73,696		90,072
Stock-based compensation		81,659		74,287
Inventory - effect of uniform capitalization		36,935		27,266
Unrealized loss (gain) on investment securities		666		(513	)
Other		2,384		308
Total deferred tax assets	$	391,255	$	342,630
Deferred tax liability:

Property, plant and equipment - principally due
to differences in depreciation methods	$	294,267	$	293,309
Total deferred tax liability		294,267		293,309
Net deferred tax asset	$	96,988	$	49,321

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 No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109, the Company recognized no material adjustments to unrecognized tax benefits. As of June 30, 2017 and 2016, the Company has no unrecognized tax benefits.

The Company recognizes interest and penalties in general and administrative expense. As of June 30, 2017 and 2016, the Company has not recorded any provision for accrued interest and penalties.

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, 2017, 2016, 2015, and 2014 remain open to examination by the IRS. State returns for tax years ending June 30, 2017, 2016, 2015 and 2014 remain open to examination by the State of New York.