INCOME TAXES

3 Months Ended

Jun. 30, 2011

INCOME TAXES

INCOME TAXES

NOTE 8 - INCOME TAXES

For the three months ended June 30, 2011 and 2010, the Company recorded Federal and State income tax expense of $256,046 and $431,102, respectively.  The estimated annual effective tax rate is 39.5%.  The difference between the provision for income taxes and the income tax determined by applying the statutory U.S. federal income tax and state income tax rates and the China Enterprise tax rate was due primarily to differences in the book and tax basis of property and equipment, deductions for domestic production activities, share based compensation and net operating loss carry forwards. 

The Company accounts for income taxes under the provisions of FASB ASC 740, Income Taxes.  Based on the weight of available evidence, the Company’s management has determined that it is more likely than not that the current deferred tax assets will be realized.  At June 30, 2011, the Company recorded a deferred tax asset of $445,345.

As of June 30, 2011, the Company’s federal net operating loss carry-forward was approximately $1.8 million.  If not utilized, the federal net operating loss carry-forward of Ranor and TechPrecision will expire in 2025 and 2027, respectively. Furthermore, because of a more than 50% change in ownership from the reverse acquisition in February 2006 as a result of the application of Section 382 of the Internal Revenue Code, the amount of net operating loss carry forward used in any one year in the future is substantially limited.

The valuation allowance for deferred tax assets of $353,070 and $354,008 at June 30, 2011 and March 31, 2011, respectively, relates principally to the uncertainty of the utilization of certain deferred tax assets, primarily tax loss and credit carry forwards in various jurisdictions.  The valuation allowance was calculated in accordance with accounting standards, which requires that a valuation allowance be established and maintained when it is “more likely than not” that all or a portion of deferred tax assets will not be realized.