6) Income Taxes

Income tax expense consisted of the following:


	Years ended April 30,
	2015			2014		2013
	(In thousands)
Current:
Federal	$	2,506		$	4,253	$	4,103
State		501			686		847

		3,007			4,939		4,950

Deferred:
Federal		(697	)		557		131
State		(36	)		70		33

		(733	)		627		164

	$	2,274		$	5,566	$	5,114

The Company’s actual income tax expense differs from the “expected” income tax expense calculated by applying the Federal statutory rate of 35% for fiscal years 2015, 2014 and 2013, to earnings before income taxes and noncontrolling interest as follows:


	Years ended April 30,
	2015			2014			2013
	(In thousands)
Computed “expected” income tax expense	$	3,641		$	5,564		$	5,434
Increase (decrease) in income taxes resulting from:
State income taxes, net of Federal income tax effect		269			493			568
Research and development credits		(516	)		(258	)		(584	)
Change in valuation allowance for deferred tax assets		(5	)		45			(187	)
Tax contingencies		(955	)		(47	)		27
Other, net, including permanent items		(160	)		(231	)		(144	)

	$	2,274		$	5,566		$	5,114

Our effective income tax rates were 22%, 35% and 33% in 2015, 2014 and 2013, respectively. Our effective income tax rate takes into account the source of taxable income, by state, and available income tax credits. The provision for income taxes in 2015, 2014 and 2013 excludes approximately $420,000, $361,000 and $160,000, respectively, of tax benefits realized from the recognition of stock option deductions, which have been recorded in additional paid-in capital.

The significant components of deferred income tax (benefit) expense attributable to income from continuing operations before income taxes for the years ended April 30, 2015, 2014, and 2013 are as follows:


	Years ended April 30,
	2015			2014		2013
	(In thousands)
Deferred tax (benefit)/expense	$	(728	)	$	582	$	351
(Decrease) increase in the valuation allowance for deferred tax assets		(5	)		45		(187	)

	$	(733	)	$	627	$	164

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at April 30, 2015 and 2014 are presented as follows:


	2015			2014
	(In thousands)
Deferred tax assets:
Accruals and expenses not deducted for tax purposes	$	914		$	1,024
State net operating loss carryforwards		350			389
Intangible assets and fixed asset basis differences		1,803			1,347
Nonqualified stock options		1,452			1,154

Total gross deferred tax assets		4,519			3,914
Less valuation allowance		461			466

Net deferred tax assets		4,058			3,448

Deferred tax liabilities:
Capitalized computer software development costs		(3,758	)		(4,109	)
Net gains/losses on trading securities		(605	)		(566	)
Goodwill		(752	)		(598	)
Other		(575	)		(529	)

Total gross deferred tax liabilities		(5,690	)		(5,802	)

Net deferred tax liabilities	$	(1,631	)	$	(2,354	)

At April 30, 2015, the Company has approximately $10.6 million of various state net operating loss carryforwards which are available to offset future state taxable income, if any, through 2034.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon reversal of deferred tax liabilities and expected future profitability, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowances, at April 30, 2015.

The Company applies the accounting provisions which require us to prescribe a recognition threshold and measurement attribution for the financial statement recognition and measurement of a tax position taken or expected to be taken within an income tax return.

As of April 30, 2015, 2014 and 2013, we have recorded approximately $115,000, $1.2 million, and $1.2 million, respectively, of unrecognized tax benefits, inclusive of interest and penalties, all of which would impact our effective tax rate if recognized. The liability for unrecognized tax benefits is recorded net of any federal tax benefit that would result from payment. During the year ended April 30, 2015, the Company recognized $973,000 of income tax benefits due to the reversal of a FIN 48 Reserve due to the expiration of statutes of limitations.

We recognize potential accrued interest and penalties related to unrecognized tax benefits within income tax expense. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. As of April 30, 2015 and 2014, we had recorded a liability for potential penalties and interest of approximately $54,000 and $160,000, respectively, related to uncertain tax positions.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows, excluding interest and penalties (in thousands):


	2015			2014
Balance at beginning of the period	$	953		$	981
Decreases as a result of positions taken during prior periods		(896	)		(28	)
Increases as a result of positions taken during the current period		4			—

Balance at April 30,	$	61		$	953

We conduct business globally and, as a result, file consolidated income tax returns in the United States Federal jurisdiction and in many state and foreign jurisdictions. We are no longer subject to state and local, or non-U.S. income tax examinations for years prior to 2000. We are no longer subject to U.S. Federal income tax examination for years prior to 2011.