Provision for Income Taxes

12 Months Ended

Jun. 30, 2024

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, 2024 and 2023 is as follows:

	2024			2023
Current tax expense - federal	$	2,515,865		$	1,059,743
Current tax (benefit) expense - state		(3,010	)		9,595
Deferred tax benefit		(1,032,981	)		(40,002	)
Provision for income taxes	$	1,479,874		$	1,029,336

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 20.3% and 21.9%, for 2024 and 2023 respectively, differed from the statutory U.S. federal income tax rate for the following reasons:

	2024			2023
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
ESOP cost versus Fair Market Value		0.1			(0.2	)
Dividend on allocated ESOP shares		(0.3	)		—
Stock-based compensation		0.2			1.0
Other		(0.7	)		(0.1	)
Effective tax rate		20.3%			21.9%

For the years ended June 30, 2024 and 2023 deferred income tax benefit of $1,032,981 and $40,002, 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, 2024 and 2023 are presented as follows:

	2024		2023
Deferred tax assets:
Accrued expenses	$	138,158	$	273,059
ESOP		32,698		24,407
Property, plant and equipment - principally due to differences in depreciation methods		601,358		—
Pension Withdrawal		162,153		—
Stock-based compensation		39,724		36,552
Total deferred tax assets	$	974,091	$	334,018
Deferred tax liability:
Property, plant and equipment - principally due to differences in depreciation methods	$	—	$	337,501
Inventory - effect of uniform capitalization		33,817		99,215
Prepaid expenses		45,120		35,129
Total deferred tax liability	$	78,937	$	471,845
Net deferred tax asset (liability)	$	895,154	$	(137,827	)

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, 2024 and 2023, the Company has no unrecognized tax benefits.

The Company recognizes interest and penalties in general and administrative expense. As of June 30, 2024 and 2023, 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, 2024, 2023, and 2022 remain open to examination by the respective taxing authorities.