INCOME TAXES

12 Months Ended

Jan. 31, 2024

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

12. INCOME TAXES

The provision for income taxes for fiscal years 2023, 2022, and 2021 consist of the following (amounts in thousands):

	2023		2022			2021
Federal:
Current	$	4,580	$	4,485		$	4,450
Deferred		14,102		2,925			12,064
Total		18,682		7,410			16,514
State and Local:
Current		3,377		4,167			3,098
Deferred		501		(2,035	)		(581	)
Total		3,878		2,132			2,517
Provision for income taxes	$	22,560	$	9,542		$	19,031

The tax effects of significant temporary differences representing deferred tax assets and liabilities are as follows (amounts in thousands):

	January 31,
	2024			2023
Assets:
General business credit carryforward	$	12,296		$	26,061
Accrued liabilities		611			627
State net operating loss carryforward		202			244
Other items		288			240
Valuation allowance		(160	)		(192	)
Total		13,237			26,980
Liabilities:
Basis in pass through entities, including depreciation		(6,334	)		(5,821	)
Other		(664	)		(292	)
Total		(6,998	)		(6,113	)
Net deferred tax asset	$	6,239		$	20,867

The net deferred tax asset is reported on the accompanying Consolidated Balance Sheets based on net position by tax jurisdiction, with federal positions recorded as net assets and state positions recorded as net liabilities. At January 31, 2024 and 2023, respectively, approximately $7.8 million and $22.0 million are recorded as assets on the Consolidated Balance Sheets within “Other assets” and $1.6 million and $1.1 million are recorded as liabilities on the accompanying Consolidated Balance Sheets within “Deferred taxes”.

The Company has a general business credit carryforward of approximately $12.3 million and $26.1 million at January 31, 2024 and 2023, respectively. The Company can carry these credits forward for up to twenty years. The carryforward period begins to expire in fiscal year 2039.

The Company has a valuation allowance of approximately $160,000 and $192,000 at January 31, 2024 and 2023, respectively, related to state net operating loss carryforwards. The Company decreased the valuation allowance by $32,000 in fiscal year 2023. These adjustments to the valuation allowance are a result of estimates of realizing certain future state tax benefits.

The Company assessed all available positive and negative evidence to determine whether it expects sufficient future taxable income will be generated to allow for the realization of existing federal deferred tax assets. There is sufficient objectively verifiable income for management to conclude that it is more likely than not that the Company will utilize available federal deferred tax assets prior to their expiration.

Through its refined coal operation, the Company earned production tax credits pursuant to IRC Section 45. The Company ceased operation of its refined coal business on November 18, 2021. The credits can be used to reduce future income tax liabilities for up to 20 years. These credits increased the income tax benefit from discontinued operations by approximately $11.3 million during fiscal year 2021.

During fiscal years 2022 and 2021, the Company recognized an income tax benefit (provision) for federal and state research and experimentation credits (net of uncertain tax position expense) of approximately $0.4 million and $(3.0) million, respectively. The credits can be used to reduce future income tax liabilities for up to 20 years.

The Company paid income taxes of approximately $12,730,000, $2,795,000, and $7,239,0000 in fiscal years 2023, 2022, and 2021, respectively. The Company did not receive any refunds in fiscal years 2023, 2022 and 2021.

Reconciliations of the federal statutory tax and the Company’s income tax expense for fiscal years 2023, 2022, and 2021 are as follows (amounts in thousands):

	2023			2022			2021
Federal income tax at statutory rate	$	20,682		$	9,971		$	15,926
State and local taxes, net of federal tax benefit		3,299			1,725			2,396
Research and experimentation credits		-			(2,542	)		(5,184	)
Nondeductibe compensation expense		2,150			508			-
Uncertain tax positions		(98	)		2,281			8,340
Noncontrolling interest		(3,650	)		(2,523	)		(2,231	)
Other		177			122			(216	)
Total	$	22,560		$	9,542		$	19,031

The Company files a U.S. federal income tax return and income tax returns in various states. In general, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for fiscal years ended January 31, 2014 and prior. The Company is currently undergoing a federal income tax examination for the years ended January 31, 2015 through January 31, 2022 related to tax credits claimed on returns during those years.

The Company applies the provisions of ASC 740-10-25-5 for uncertain tax positions. As of January 31, 2024, total unrecognized tax benefits were approximately $18,895,000, and accrued penalties and interest were approximately $70,000. If the Company were to prevail on all unrecognized tax benefits recorded, the provision for income taxes would be reduced by approximately $18,812,000. In addition, the impact of penalties and interest would also benefit the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense.

On a quarterly and annual basis, the Company accrues for the effects of open uncertain tax positions and the related potential penalties and interest. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will increase or decrease during the next 12 months; however, the Company does not expect the change to have a material effect on results of operations or financial position. The Company accounts for uncertainty in income taxes by determining whether it is more likely than not the position will be sustained on audit, including resolution of any related tax audits. A reconciliation of the beginning and ending amount of unrecognized tax benefits, including interest and penalties, is as follows (amounts in thousands):

	Fiscal Year
	2023			2022
Unrecognized tax benefits, beginning of year	$	19,088		$	16,781
Changes for tax positions for prior years		45			165
Changes for tax positions for current year		(168	)		2,142
Unrecognized tax benefits, end of year	$	18,965		$	19,088

At January 31, 2024 and 2023, approximately $16.4 million of the unrecognized tax benefits balance was recorded on the accompanying Consolidated Balance Sheets within “Other assets” and $0.6 million was recorded within “Other long-term liabilities”. At January 31, 2024 and 2023, respectively, approximately $2.0 million and $2.1 million of the unrecognized tax benefits balance was recorded on the accompanying Consolidated Balance Sheets within “Refundable income taxes”.