(14)

INCOME TAXES:

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

		Year Ended April 30,
		2015	2014
		(in thousands)
Current:
Federal	$	(676)	$	(782)
State and local		16		(104)
		(660)		(886)
Deferred:
Federal		(1,387)		(235)
State and local		(85)		554
		(1,472)		319
Total benefit for income taxes	$	(2,132)	$	(567)

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

	April 30,
	2015		2014
	(in thousands)
Deferred income tax assets:
State tax loss carryforwards	$	4,272	$	3,340
Accrued pension costs		4,274		2,376
U.S. Federal NOL carryforward		-		4,946
Vacation accrual		210		405
Intangibles and deductible goodwill		4,835		5,560
Real estate basis differences		4,296		3,309
Other		177		-
Total deferred income tax assets		18,064		19,936

Deferred income tax liabilities:
Depreciable assets		(3,776)		(4,049)
Deferred gains on investment assets		(4,423)		(4,423)
Capitalized costs for financial reporting purposes, expensed for tax		(371)		(451)
Other		-		(318)
Total deferred income tax liabilities		(8,570)		(9,241)
Valuation allowance for realization of state tax loss carryforwards		(3,657)		(2,627)
Net deferred income tax asset	$	5,837	$	8,068

Valuation allowance is provided when it is considered more likely than not that certain deferred tax assets will not be realized. The valuation allowance of $3,657,000 as of April 30, 2015 relates to net operating loss carryforwards in states where the Company either has no current operations or its operations are not considered likely to use the net operating loss carryforward prior to its expected expiration date. The net change in the total valuation allowance for state deferred taxes for 2015 was an increase of $1,030,000 and for 2014 was an increase of $359,000. The effect of the change in the valuation allowance is reflected in the state income taxes, net of federal income tax effect, in the rate reconciliation table shown below.

The remaining state net operating loss carryforwards expire beginning in the fiscal years ending April 30, 2016 through April 30, 2036. The state net operating loss carryforwards of $106,973,000 expire in future fiscal years as follows: 2016 - $0; 2017 - $0; 2018 - $0; 2019 - $0; 2020 - $1,969,000; and thereafter - $105,004,000.

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,
		2015	2014
		(in thousands)
Computed tax provision (benefit) at statutory rate	$	(2,000)	$	(470)
Increase (reduction) in tax resulting from:
State income taxes, net of federal income tax effect		(45)		(186)
Expiration of state NOLs		-		181
Meals and entertainment		11		16
Other		(98)		(108)
Actual tax provision (benefit)	$	(2,132)	$	(567)

The Company expects to utilize its U.S. federal net operating loss carryforward of approximately $14,416,000 and certain state net operating loss carry forwards as of April 30, 2015 to offset taxable income resulting from the results of operations for 2015. Such utilization is included in the results from discontinued operations. In addition, $9,148,000 of goodwill associated with the Palm Coast acquisition remains amortizable as of April 30, 2015.

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 interpretation and require significant judgment to apply.

During 2014, the Company reached a settlement with the Internal Revenue Service (the “IRS”) with respect to the examination of the Company’s fiscal year 2012 and 2011 federal income tax returns. The Company did not have to pay any additional federal taxes as a result of the IRS’s examination of the two years due to the Company’s existing net operating losses, which were reduced by approximately $2,400,000. As a result of the completion of the examinations, the Company reduced its liability for uncertain tax positions by $160,000, including accrued interest. This reduction had the effect of increasing the tax benefit in the accompanying financial statements for 2014.

The Company is not currently under examination by any 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, 2011 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:

	2015		2014
	(in thousands)
Gross unrecognized tax benefits at beginning of year	$	58	$	1,516
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		-		(1,458)
Reductions based on the lapse of the applicable statute of limitations		-		-
Gross unrecognized tax benefits at end of year	$	58	$	58

The total tax effect of gross unrecognized tax benefits at April 30, 2015 and 2014 was $58,000 as of each date 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 $0 at April 30, 2015 and 2014. No amount has been accrued for penalties. In 2015 and 2014, the Company recognized net credits of $0 and $134,000 to its income tax provision related to interest in 2014, which resulted from the reduction of unrecognized tax benefits due to the completion of the IRS audit noted above for the fiscal year 2012 and 2011 tax returns.