Income Taxes

12 Months Ended

Mar. 31, 2019

Note 6 — Income Taxes

The income tax provision consisted of the following for the fiscal years ended March 31, 2019, 2018 and 2017:

	2019		2018			2017
Current — Federal	$	10,233,000	$	11,177,000		$	16,456,000
Current — State		3,121,000		1,905,000			2,834,000
Subtotal		13,354,000		13,082,000			19,290,000
Deferred — Federal		941,000		(955,000	)		(1,508,000	)
Deferred — State		515,000		81,000			288,000
Subtotal		1,456,000		(874,000	)		(1,220,000	)
	$	14,810,000	$	12,208,000		$	18,070,000

The following is a reconciliation of the income tax provision from the statutory federal income tax rate to the effective rate for the fiscal years ended March 31, 2019, 2018 and 2017:

	2019			2018			2017
Income taxes at federal statutory rate	$	12,918,000		$	15,112,000		$	16,643,000
State income taxes, net of federal benefit		2,848,000			1,645,000			1,973,000
Uncertain tax positions		(175,000	)		(464,000	)		88,000
Permanent items and tax credits		(666,000	)		(1,364,000	)		(705,000	)
Adjustments to returns as filed		131,000			138,000			80,000
Valuation allowance		317,000			236,000			—
Impact of tax reform		(563,000	)		(3,095,000	)		—
Other		—			—			(9,000	)
	$	14,810,000		$	12,208,000		$	18,070,000

Deferred tax assets and liabilities at March 31, 2019 and 2018 are, as follows:

	2019			2018
Deferred tax assets:
Accrued liabilities not currently deductible	$	6,277,000		$	5,703,000
Allowance for doubtful accounts		1,422,000			1,151,000
Stock-based compensation		1,833,000			1,631,000
Accrued rent		1,474,000			1,555,000
Other		1,123,000			896,000
Deferred tax assets		12,129,000			10,936,000
Deferred tax liabilities:
Excess of book over tax basis of fixed assets		(10,836,000	)		(11,191,000	)
Intangible assets		(4,438,000	)		(4,169,000	)
Accrued revenue		(2,354,000	)		—
Other		(242,000	)		(179,000	)
Total deferred tax liabilities		(17,870,000	)		(15,539,000	)
Valuation allowance		(553,000	)		(236,000	)
Deferred tax liabilities		(18,423,000	)		(15,775,000	)
Net deferred tax liability	$	(6,294,000	)	$	(4,839,000	)

Prepaid expenses and income taxes include $1,160,000 and $1,962,000 at March 31, 2019 and 2018, respectively. Accounts and income taxes payable include $73,000 at March 31, 2019, for income taxes due in the first quarter of the following fiscal year.

A reconciliation of the financial statement recognition and measurement of uncertain tax positions during the current fiscal year is as follows:

Balance as of March 31, 2018	$	1,472,000
Additions based on tax positions related to the current year		82,000
Additions for tax positions of prior years		—
Reductions for tax positions related to the current year		—
Reductions for tax positions of prior years		(290,000	)
Balance as of March 31, 2019	$	1,264,000

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. During the fiscal years ended March 31, 2019, 2018 and 2017, the Company recognized approximately $22,000, $(53,000) and $35,000 in interest and penalties, respectively. As of March 31, 2019, 2018 and 2017, accrued interest and penalties related to uncertain tax positions were $216,000, $194,000 and $247,000, respectively.

The tax fiscal years from 2015-2018 remain open to examination by the major taxing jurisdictions to which the Company is subject.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law. Among numerous provisions included in the new law was the reduction of the corporate federal income tax rate from 35% to 21% effective January 1, 2018. As a result of this federal income tax rate change, during the fiscal year ended March 31, 2019, we reported an effective tax rate of 24%. However, we continue to analyze and assess the impact of the Tax Cuts and Jobs Act and believe certain aspects of its impact on our business may not be fully known for some time. The final impact may differ, possibly materially, due to, among other things, changes in interpretations, assumptions made by us, the issuance of federal tax regulations and guidance, and actions we may take as a result of the Tax Cuts and Jobs Act. Depending on the final impact, our effective combined federal and state tax rate could be higher for the fiscal year beginning April 1, 2019. In the absence of guidance on various uncertainties and ambiguities in the application of certain provisions of the Tax Cuts and Jobs Act, we are using what we believe are reasonable interpretations and assumptions in applying the Tax Cuts and Jobs Act, but it is possible that the U.S. Department of Treasury could issue subsequent rules and regulations, or the Internal Revenue Service could issue subsequent guidance or take positions on audit, that differ from our prior interpretations and assumptions, which could have a material, adverse effect on our cash, tax assets and liabilities, results of operations, and financial condition.