NOTE 12 - INCOME TAXES	6 Months Ended
Dec. 31, 2017
Income Tax Disclosure [Abstract]
NOTE 12 - INCOME TAXES	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 12 - INCOME TAXES ASC topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a corporate tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized (or amount of net operating loss carryforward or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC topic 740. In accordance with ASC topic 740, interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as “Interest expense, net”. Penalties if incurred would be recognized as a component of “Selling, general and administrative” expenses. The Company files corporate income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2010. The Company’s effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year’s taxable income on a periodic basis as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions. The Tax Cuts and Jobs Act was signed into law on December 22, 2017 and makes numerous changes to the Internal Revenue Code. Among other changes, the Act reduces the US corporate income tax rate to 21% effective January 1, 2018. Because the Act became effective mid-way through the Company’s tax year, the Company will have a US statutory income tax rate of 27.7% for the fiscal 2018 and will have a 21% statutory income tax rate for fiscal years thereafter. Under ASC740, Accounting for Income Taxes, the enactment of the Tax Act also requires companies, to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation in enacted. The Company’s gross deferred tax assets and liabilities will be revalued from 35% to 21% with a corresponding offset to the valuation allowance and any potential other taxes arising due to the Tax Act will result in reductions to its net operating loss carryforward and valuation allowance. Deferred tax assets of approximately $46.2 million will be revalued to approximately $30.2 million with an approximated corresponding decrease to the Company’s valuation allowance. The Company will continue to analyze the Tax Act to assess the full effects on its financial results, including disclosures, for our fiscal year ending June 30, 2018. The Company recorded a deferred tax asset of $17,287 and a deferred tax liability of $332 as of December 31, 2017, primarily relating to net operating loss carryforwards of approximately $99,019 available to offset future taxable income through 2030. The net operating losses begin to expire in 2021 for federal tax purposes and in 2017 for state income tax purposes. During the three and six months ended December 31, the Company recorded a net decrease in its deferred tax asset of $575 for 2017 and a net increase $800 for 2016, in its condensed consolidated balance sheets. During the three months ended December 31, the Company recorded a net provision of $575 for 2017 and a net benefit of $353 ($800 benefit offset by a $447 provision) for 2016, in its condensed consolidated statements of income. During the six months ended December 31, 2017 the Company recorded a net provision of $760 and a net benefit of $153($800 benefit offset by a $647 provision) for 2016, in its consolidated statements of income. As of each reporting date management considers new evidence, both positive and negative that could effect its view of future realization of deferred tax assets. Due to the ability to sustain profitable levels of income on the U.S. Federal tax jurisdiction, management determined that there is sufficient positive evidence to conclude that it is more likely than not, that such deferred taxes are realizable. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers projected future taxable income and tax planning strategies and the regulatory environment in making this assessment. At present, the Company believes that it is more-likely-than-not that the tax benefits from certain NOL carryforwards will not be fully realized. In recognition of this inherent risk, a valuation allowance is maintained as a reduction of the gross deferred tax assets that is not expected to be utilized. A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of the remainder of the valuation. Should the Company continue to remain profitable in future periods and the risks of the regulatory environment are minimized, with supportable trends, the valuation allowance will be reversed accordingly.

NOTE 12 - INCOME TAXES

6 Months Ended

Dec. 31, 2017

NOTE 12 - INCOME TAXES

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 and 2016

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 12 - INCOME TAXES

ASC topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a corporate tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized (or amount of net operating loss carryforward or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC topic 740.

In accordance with ASC topic 740, interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as “Interest expense, net”. Penalties if incurred would be recognized as a component of “Selling, general and administrative” expenses.

The Company files corporate income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2010.

The Company’s effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year’s taxable income on a periodic basis as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.

The Tax Cuts and Jobs Act was signed into law on December 22, 2017 and makes numerous changes to the Internal Revenue Code. Among other changes, the Act reduces the US corporate income tax rate to 21% effective January 1, 2018. Because the Act became effective mid-way through the Company’s tax year, the Company will have a US statutory income tax rate of 27.7% for the fiscal 2018 and will have a 21% statutory income tax rate for fiscal years thereafter.

Under ASC740, Accounting for Income Taxes, the enactment of the Tax Act also requires companies, to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation in enacted. The Company’s gross deferred tax assets and liabilities will be revalued from 35% to 21% with a corresponding offset to the valuation allowance and any potential other taxes arising due to the Tax Act will result in reductions to its net operating loss carryforward and valuation allowance. Deferred tax assets of approximately $46.2 million will be revalued to approximately $30.2 million with an approximated corresponding decrease to the Company’s valuation allowance. The Company will continue to analyze the Tax Act to assess the full effects on its financial results, including disclosures, for our fiscal year ending June 30, 2018.

The Company recorded a deferred tax asset of $17,287 and a deferred tax liability of $332 as of December 31, 2017, primarily relating to net operating loss carryforwards of approximately $99,019 available to offset future taxable income through 2030. The net operating losses begin to expire in 2021 for federal tax purposes and in 2017 for state income tax purposes.

During the three and six months ended December 31, the Company recorded a net decrease in its deferred tax asset of $575 for 2017 and a net increase $800 for 2016, in its condensed consolidated balance sheets. During the three months ended December 31, the Company recorded a net provision of $575 for 2017 and a net benefit of $353 ($800 benefit offset by a $447 provision) for 2016, in its condensed consolidated statements of income. During the six months ended December 31, 2017 the Company recorded a net provision of $760 and a net benefit of $153($800 benefit offset by a $647 provision) for 2016, in its consolidated statements of income.

As of each reporting date management considers new evidence, both positive and negative that could effect its view of future realization of deferred tax assets. Due to the ability to sustain profitable levels of income on the U.S. Federal tax jurisdiction, management determined that there is sufficient positive evidence to conclude that it is more likely than not, that such deferred taxes are realizable.

The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers projected future taxable income and tax planning strategies and the regulatory environment in making this assessment. At present, the Company believes that it is more-likely-than-not that the tax benefits from certain NOL carryforwards will not be fully realized. In recognition of this inherent risk, a valuation allowance is maintained as a reduction of the gross deferred tax assets that is not expected to be utilized.

A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of the remainder of the valuation. Should the Company continue to remain profitable in future periods and the risks of the regulatory environment are minimized, with supportable trends, the valuation allowance will be reversed accordingly.