Provision for Income Taxes

12 Months Ended

Jun. 30, 2023

Provision for Income Taxes [Abstract]

Provision for Income Taxes

Note 8. Provision for Income Taxes

A summary of the components of the provision for income taxes for the years ended June 30, 2023 and 2022 is as follows:

	2023			2022
Current tax expense - federal	$	1,059,743		$	313,705
Current tax expense - state		9,595			4,978
Deferred tax (benefit) expense		(40,002	)		9,271
Provision for income taxes	$	1,029,336		$	327,954

Deferred income taxes reflect the impact of "temporary differences" between the amount of assets and liabilities for financial reporting purposes and such amounts measured by tax laws and regulations. These "temporary differences" are determined in accordance with ASC 740-10.

The combined U.S. federal and state effective income tax rates of 21.9% and 20.6%, for 2023 and 2022 respectively, differed from the statutory U.S. federal income tax rate for the following reasons:

	2023			2022
U.S. federal statutory income tax rate		21.0	%		21.0	%
Increase (reduction) in rate resulting from:
State franchise tax, net of federal income tax benefit		0.2			0.3
ESOP cost versus Fair Market Value		(0.2	)		(1.3	)
Dividend on allocated ESOP shares		—			(3.1	)
Stock-based compensation		1.0			4.0
Rate Differential on Net Operating Loss Carryback		—			(0.1	)
Other		(0.1	)		(0.2	)
Effective tax rate		21.9	%		20.6	%

For the years ended June 30, 2023 and 2022 deferred income tax (benefit) expense of ($40,002) and $9,271, respectively, results from the changes in temporary differences for each year. The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities as of June 30, 2023 and 2022 are presented as follows:

	2023			2022
Deferred tax assets:
Accrued expenses	$	273,059		$	204,774
ESOP		24,407			14,237
Stock-based compensation		36,552			33,719
Total deferred tax assets	$	334,018		$	252,730
Deferred tax liability:
Property, plant and equipment - principally due to differences in depreciation methods	$	337,501		$	374,566
Inventory - effect of uniform capitalization		99,215			19,276
Prepaid expenses		35,129			36,716
Total deferred tax liability	$	471,845		$	430,558
Net deferred tax liability	$	(137,827	)	$	(177,828	)

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projection for future taxable income over the period in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these temporary differences without consideration of a valuation allowance.

As the result of the implementation of the FASB interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109, the Company recognized no material adjustments to unrecognized tax benefits. As of June 30, 2023 and 2022, the Company has no unrecognized tax benefits.

The Company recognizes interest and penalties in general and administrative expense. As of June 30, 2023 and 2022, the Company has not recorded any provision for accrued interest and penalties.

The Company is subject to taxation in the United States and various state jurisdictions. The federal tax returns are subject to audit for three years from date of filing unless the return was audited within that period. In general the majority of state statutes follow similar guidelines. As such, the Company’s tax returns for tax years ending June 30, 2023, 2022, and 2021 remain open to examination by the respective taxing authorities.