The Company utilizes the liability method of accounting for income taxes. The liability method measures the expected income tax impact of future taxable income and deductions implicit in the Consolidated Balance Sheets. The income tax provision in 2016 and 2015 consisted of the following:



Year Ended June 30,	2016		2015
Current:
Federal	$	169,350	$	(100,126	)
State	2,675		(167,282		)
Deferred	702,013		284,783
Total income tax provision	$	874,038	$	17,375

The 2016 and 2015 tax results in an effective rate different than the federal statutory rate because of the following:



Year Ended June 30,	2016			2015
Federal income tax expense at statutory rate	$	769,433		$	169,996
State income tax expense (benefit), net of federal income tax benefit	91,660			(21,442		)
Decrease in valuation allowance	(370,000		)	—
Stock-based compensation	447,180			53,596
Adjustments for unrecognized tax benefits	—			(175,000		)
Other	(64,235		)	(9,775		)
Total income tax provision	$	874,038		$	17,375

Temporary differences which give rise to deferred income tax assets and liabilities at June 30, 2016 and June 30, 2015 include:



	2016			2015
Deferred income tax assets:
Deferred compensation	$	864,954		$	835,270
Stock-based compensation	603,159			889,325
Accrued expenses and reserves	1,390,910			2,075,601
Federal and state net operating loss carryforwards	418,296			463,237
Valuation allowance	(409		)	(370,409		)
Equipment and leasehold improvements	—			11,566
Other	5,979			14,650
Total deferred income tax assets	3,282,889			3,919,240

Deferred income tax liabilities:
Equipment and leasehold improvements	(67,390		)	—
Other	(2,943		)	(4,671		)
Net deferred income tax assets	$	3,212,556		$	3,914,569

Deferred income tax balances reflect the effects of temporary differences between the tax bases of assets and liabilities and their carrying amounts. These differences are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. The recognition of these deferred tax balances will be realized through normal recurring operations and, as such, the Company has recorded the full value of such expected benefits. The Company has no federal net operating loss carryforwards as of June 30, 2016. The Company has net operating loss carryforwards in the state of Wisconsin totaling $5,892,509 which expire in fiscal years 2030 through 2035. In addition, the Company has operating loss carryforwards in other states totaling $324,326, which expire in fiscal years 2026 through 2035.

ASC Topic 740 "Income Taxes" prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. There were no additional significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return that have been recorded on the Company’s consolidated financial statements for the year ended June 30, 2016.

Additionally, ASC Topic 740 provides guidance on the recognition of interest and penalties related to income taxes. No interest or penalties related to income taxes has been accrued or recognized as of and for the years ended June 30, 2016 and 2015. The Company records interest related to unrecognized tax benefits in interest expense.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	2016		2015
Unrecognized tax benefits at beginning of year	$	—	$	175,000
Reductions based on settlements with taxing authorities	—		(175,000		)
Unrecognized tax benefits at end of year	$	—	$	—

In the fiscal year ended June 30, 2015, the Company settled its position with a state tax authority and reduced the unrecognized tax benefits to zero. The Company does not believe it has any unrecognized tax benefits as of June 30, 2016. Any changes to the Company's unrecognized tax benefits during the fiscal years ended June 30, 2016 and 2015 would impact the effective tax rate.

The Company files income tax returns in the United States federal jurisdiction and in several state jurisdictions. The Company’s federal tax returns for tax years beginning July 1, 2012 or later are open. For states in which the Company files state income tax returns, the statute of limitations is generally open for tax years ended June 30, 2012 and forward.

The following are the changes in the valuation allowance:



Year Ended June 30,	Balance, beginning of year			Increase in valuation allowance	Release of valuation allowance	Balance, end of year
2016	$	(370,409	)	—	370,000	$	(409	)
2015	$	(370,409	)	—	—	$	(370,409	)