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Income Taxes
12 Months Ended
Apr. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law, which contains several income tax provisions, as well as other measures, aimed at assisting businesses impacted by the economic effects of the COVID-19 pandemic. The CARES Act includes a broad range of tax reform provisions affecting businesses, including permissible net operating losses ("NOLs") carrybacks up to five years, changes in business deductions limitations, and deferral of Social Security withholdings. The Company applied the NOL carryback provision of the CARES Act with respect to its estimated NOL for fiscal year 2021 to years that had higher enacted tax rates. The Company also applied the deferral of Social Security withholdings in accordance with the CARES Act; 50% of these deferred withholdings were due and paid by December 31, 2021, with the remainder due December 31, 2022.
Effective August 1, 2019, the Company elected to revoke the indefinite reinvestment of foreign unremitted earnings position set forth by ASC 740-30-25-17 for multiple foreign subsidiaries. As a result of this election, the Company recorded a tax withholding expense imposed by the India Income Tax Department of $240,000 and $226,000 for the years ended April 30, 2022 and 2021, respectively.
The Company's accounting policy with respect to the Global Intangible Low-Taxed Income ("GILTI") tax rules is that GILTI will be treated as a periodic charge in the year in which it arises. The Company had no tax expense related to GILTI for the years ended April 30, 2022 and 2021.
Income tax expense consisted of the following:
$ in thousands20222021
Current tax expense (benefit):
Federal$1,899 $(396)
State and local490 
Foreign1,008 1,136 
Total current tax expense (benefit)3,397 748 
Deferred tax expense (benefit):
Federal 449 
State and local (135)
Foreign121 (72)
Total deferred tax expense121 242 
Net income tax expense$3,518 $990 
The reasons for the differences between the above net income tax expense and the amounts computed by applying the statutory federal income tax rate to earnings before income taxes are as follows:
$ in thousands20222021
Income tax benefit at statutory rate$(432)$(470)
State and local taxes, net of federal income tax benefit (29)(129)
Tax credits (state, net of federal benefit)(457)(415)
Effects of differing US and foreign tax rates22 17 
Tax on unrepatriated and repatriated foreign earnings 226 
Net operating loss adjustment(286)118 
Impact of foreign subsidiary income to parent74 67 
Increase in valuation allowance4,170 1,538 
Other items, net456 38 
Net income tax expense$3,518 $990 
Significant items comprising deferred tax assets and liabilities as of April 30 were as follows:
$ in thousands20222021
Deferred tax assets:
Accrued employee benefit expenses$228 $296 
Allowance for doubtful accounts142 154 
Deferred compensation1,196 1,283 
Tax credits (state, net of federal benefits)170 978 
Foreign tax credit carryforwards638 638 
Unrecognized actuarial loss, defined benefit plans1,202 1,196 
Inventory reserves62 69 
Net operating loss carryforwards112 572 
Proceeds on Sale Leaseback7,215 — 
Other497 568 
Total deferred tax assets11,462 5,754 
Deferred tax liabilities:
Book basis in excess of tax basis of property, plant and equipment(1,758)(1,596)
Book basis in excess of tax basis of Sale Leaseback property(1,122)— 
Prepaid pension(949)(847)
APB 23 Assertion(976)(765)
Debt Issuance Cost on Sale Leaseback(184)— 
Other (122)
Total deferred tax liabilities(4,989)(3,330)
Valuation allowance(6,901)(2,731)
Net deferred tax liabilities$(428)$(307)
Deferred tax assets (liabilities) classified in the balance sheet:
Non-current(428)(307)
Net deferred tax liabilities$(428)$(307)
The Company is required to evaluate the realization of the deferred tax asset and any requirement for a valuation allowance in accordance with ASC 740-10-30-2(b). The Company evaluates all available evidence, both positive and negative, to determine the amount of any required valuation allowance. A deferred tax asset valuation allowance of $6,901,000 was recorded in the period ended April 30, 2022 based on ASC 740-10-30-18. This guidance provides that the future realization of the tax benefit of an existing deductible temporary difference or carryforward ultimately depends on sufficient taxable income of the appropriate character within the carryback or carryforward period available under the tax law.
At April 30, 2022, the Company had foreign tax credit carryforwards in the amount of $638,000, which are subject to a full valuation allowance, and which begin to expire in 2028.
The Company files federal, state and local tax returns with statutes of limitation generally ranging from 3 to 4 years. The Company is generally no longer subject to federal tax examinations for years prior to fiscal year 2018 or state and local tax examinations for years prior to fiscal year 2017. Tax returns filed by the Company's significant foreign subsidiaries are generally subject to statutes of limitations of 3 to 7 years and are generally no longer subject to examination for years prior to fiscal year 2016. The Company has no unrecognized tax benefits.