(12) INCOME TAXES:

The provision (benefit) for income taxes consists of the following:

	Year Ended April 30,
	2013		2012		2011
	(in thousands)
Current:
Federal	$	(131)	$	(370)	$	(606)
State and local		11		114		4
		(120)		(256)		(602)
Deferred:
Federal		(1,334)		(505)		(2,277)
State and local		(305)		(135)		(333)
		(1,639)		(640)		(2,610)
Total provision (benefit) for income taxes	$	(1,759)	$	(896)	$	(3,212)

The components of the net deferred income taxes are as follows:

	April 30,
	2013		2012
	(in thousands)
Deferred income tax assets:
State tax loss carryforwards	$	3,927	$	3,942
Accrued pension costs		3,827		4,927
U.S. Federal NOL carryforward		5,592		4,476
Canadian NOL carryforward		133		-
Vacation accrual		698		700
Intangibles and deductible goodwill		6,595		7,377
Real estate basis differences		2,523		1,045
Other		103		-
Total deferred income tax assets		23,398		22,467

Deferred income tax liabilities:
Reserve for periodical returns		(2,036)		(2,009)
Depreciable assets		(4,446)		(4,358)
Deferred gains on investment assets		(4,428)		(4,679)
Capitalized costs for financial reporting purposes, expensed for tax		(606)		(536)
Other		-		(315)
Total deferred income tax liabilities		(11,516)		(11,897)

Valuation allowance for realization of state tax loss carryforwards		(2,268)		(2,544)
Net deferred income tax asset	$	9,614	$	8,026

The following table reconciles taxes computed at the U.S. federal statutory income tax rate from continuing operations to the Company's actual tax provision:

	Year Ended April 30,
	2013		2012		2011
	(in thousands)
Computed tax provision (benefit) at statutory rate	$	(1,610)	$	(713)	$	(3,770)
Increase (reduction) in tax resulting from:
State income taxes, net of federal income tax effect		(192)		(14)		(228)
Expiration of state NOLs		237		342		324
Change in valuation allowance		(276)		(338)		(281)
Adjustment for unrecognized tax benefits		(41)		(296)		(619)
Non-deductible goodwill impairment (see Note 14)		-		-		1,363
Meals and entertainment		45		47		54
Other		78		76		(55)
Actual tax provision (benefit)	$	(1,759)	$	(896)	$	(3,212)

A valuation allowance is provided when it is considered more likely than not that certain deferred tax assets will not be realized. The valuation allowance relates entirely to net operating loss carryforwards in states where the Company has no current operations. The remaining net operating loss carryforwards expire beginning in the fiscal years ending April 30, 2014 through April 30, 2034. The state net operating loss carryforwards of $97,943,000 expire in future fiscal years as follows: 2014 - $6,000; 2015 - $954,000; 2016 - $729,000; 2017 - $2,468,000; 2018 - $939,000; and thereafter - $92,847,000.

The Company has a U.S. federal net operating loss carryforward of approximately $16,500,000 of which approximately $5,000,000 resulted from the purchase of Palm Coast which will begin to expire in the fiscal year ending April 30, 2026. In addition, $12,606,000 of goodwill associated with the Palm Coast acquisition remains amortizable as of April 30, 2013. The Company also has a Canadian net operating loss carryforward of approximately $700,000 which will begin to expire in the fiscal year ending April 30, 2032.

The Company is subject to U.S. federal income taxes, and also to various state and local income taxes. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. During the quarter ended October 31, 2012, the Company reached a settlement with the Internal Revenue Service with respect to an examination of its fiscal 2010 and 2005 federal tax returns. As a result, the Company paid $597,000 in taxes related to (i) deferred gains on investment assets not previously recognized and (ii) the timing of certain deductible expenses, and accrued $33,000 of interest related to this payment. The Company charged $589,000 to previously accrued current and deferred income tax liabilities and $41,000 to the income tax provision in the accompanying consolidated financial statements as a result of this settlement.

The Company is currently undergoing an examination of its fiscal 2011 U.S. federal tax returns by the Internal Revenue Service. The Company is not under examination by any other tax authorities with respect to its income tax returns. Other than the U.S. federal tax return, in nearly all jurisdictions, the tax years through the fiscal year ended April 30, 2009 are no longer subject to examination due to the expiration of the statute of limitations.

ASC 740-10 clarifies the accounting for uncertain tax positions, prescribing a minimum recognition threshold a tax position is required to meet before being recognized, and providing guidance on the derecognition, measurement, classification and disclosure relating to income taxes. The following table summarizes the beginning and ending gross amount of unrecognized tax benefits (in thousands):

	2013		2012
Gross unrecognized tax benefits at beginning of year	$	1,741	$	2,384
Gross increases:
Additions based on tax positions related to current year		-		-
Additions based on tax positions of prior years		-		-
Gross decreases:
Reductions based on tax positions of prior years		(217)		(302)
Reductions based on the lapse of the applicable statute of limitations		(8)		(341)
Gross unrecognized tax benefits at end of year	$	1,516	$	1,741

The total tax effect of gross unrecognized tax benefits at April 30, 2013 and 2012 was $58,000 and $66,000 which, if recognized, would have an impact on the effective tax rate. The Company believes it is reasonably possible that the liability for unrecognized tax benefits will not change in the next twelve months. The Company has elected to include interest and penalties in its income tax expense. The total amount of interest payable recognized in the accompanying consolidated balance sheets was $134,000 at April 30, 2013 and $171,000 at April 30, 2012. No amount has been accrued for penalties. In 2013 and 2012, the Company recognized net credits of $37,000 and $55,000 to its income tax provision related to interest, which resulted from the reduction of unrecognized tax benefits due to the expiration of the statute of limitations, offset in part by interest accrued for existing uncertain tax positions.