Note 7 - Income Taxes

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

7

–

Income Taxes

On

December 22, 2017,

the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (

Tax Act). The Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other things, decreasing U.S. corporate income tax rates to

21.0%

from

35.0%.

As the Corporation has a

June 30

fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a blended U.S. statutory federal rate of approximately

27.55%

for the Corporation's fiscal year ending

June 30, 2018,

and

21.0%

for subsequent fiscal years. In addition, the reduction of the corporate tax rate required the Corporation to revalue its deferred tax assets and liabilities based on the lower federal tax rate of

21.0%.

As a result of the new legislation, during the quarter ended

December 31, 2017,

the Corporation recorded a

one

-time income tax expense of $

348

in conjunction with writing down its net deferred tax assets. The impact of using the

27.55%

blended federal tax rate for the quarter ended

December 31, 2017

versus a

34.0%

rate reduced the income tax expense by approximately

$95.

Therefore, the effective tax rate was

42.7%

and

31.7%

for the

three

and

six

months ended

December 31, 2017,

respectively, compared to

16.7%

and

19.7%

for the

three

and

six

months ended

December 31, 2016,

respectively.

The changes included in the T

ax Act are broad and complex. The final transition impacts of the Tax Act

may

differ from the above estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, and any changes in accounting standards for income taxes or related interpretations in response to the Tax Act

.