Income Taxes

12 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes The following are the components of income taxes (in thousands):

Fiscal years ended June 30,	2019		2018
Current
Federal	$	673	$	1,192
State		339		542
		1,012		1,734
Deferred
Federal		663		562
State		198		120
		861		682
	$	1,873	$	2,416

The reconciliation of income tax expense computed at the federal statutory tax rate of 21% and 28% for the fiscal years ended June 30, 2019 and 2018, respectively, to the provision for income taxes is as follows (in thousands):

Fiscal years ended June 30,	2019			2018
Tax at the statutory rate	$	1,180		$	1,788
State income taxes,      net of federal benefit		323			319
Other		370			309
	$	1,873		$	2,416
Effective tax rate		33.4	%		37.9	%

Deferred income taxes reflect the net tax effect of temporary differences between the basis of assets and liabilities for financial reporting purposes and the basis used for income tax purposes.  Significant components of the Company’s current and noncurrent deferred tax assets and liabilities as of June 30, 2019 and 2018 were as follows (in thousands):

Fiscal years ended June 30,	2019			2018
Deferred tax assets:
Allowance for doubtful accounts	$	116		$	66
Inventory capitalization		471			303
Stock compensation		499			277
Other		46			74
		1,132			720
Deferred tax liabilities:
Goodwill		(1,375	)		(664	)
Depreciation		(1,217	)		(614	)
Intangible assets		(248	)		—
		(2,840	)		(1,278	)
Net deferred income tax (liabilities) assets	$	(1,708	)	$	(558	)

As of June 30, 2019, the Company was subject to potential federal and state tax examinations for the tax years including and subsequent to 2014.  

As previously discussed, on December 22, 2017, the U.S. government enacted the Tax Act. The Tax Act represents significant U.S. federal tax reform legislation that includes a permanent reduction to the U.S. federal corporate income tax rate. Pursuant to SAB 118, the Company’s measurement period for implementing the accounting changes required by the Tax Act closed on December 22, 2018. The Company completed the accounting under ASC 740 in the second quarter of fiscal 2019, and there were no adjustments to the preliminary amounts previously recognized.