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Income Taxes
 12 Months Ended
Apr. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense consisted of the following: 
 Years ended April 30,
 202220212020
 (in thousands)
Current:
Federal$1,294 $693 $295 
State615 386 370 
1,909 1,079 665 
Deferred:
Federal(712)(238)(513)
State(142)(82)(96)
(854)(320)(609)
$1,055 $759 $56 

The Company’s actual income tax expense differs from the “expected” income tax expense calculated by applying the Federal statutory rate of 21.0% for fiscal 2022, 2021, and 2020 to earnings before income taxes as follows:
 Years ended April 30,
 202220212020
 (in thousands)
Computed “expected” income tax expense$2,905 $1,858 $1,428 
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal income tax effect396 323 214 
Research and development credits(522)(640)(703)
Excess tax benefits from stock option deductions(1,737)(641)(737)
Foreign tax credits(44)(1)(164)
Other, net, including permanent items57 (140)18 
$1,055 $759 $56 

Our effective income tax rates were 7.6%, 8.6%, and 1.0% in fiscal 2022, 2021 and 2020, 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 fiscal 2022, 2021 and 2020 includes approximately $2,067,000, $763,000 and $878,000, respectively, in income tax benefits related to the tax benefits realized from stock option deductions.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at April 30, 2022 and 2021 are presented as follows:
20222021
 (in thousands)
Deferred tax assets:
Accruals and expenses not deducted for tax purposes$473 $565 
State net operating loss carryforwards49 136 
Fixed asset basis differences823 797 
Nonqualified stock options1,740 1,184 
Foreign net operating loss carryforwards3,873 3,141 
Right of use liability251 390 
Tax credit carryforwards83 83 
Total gross deferred tax assets7,292 6,296 
Less valuation allowance(3,891)(3,252)
Net deferred tax3,401 3,044 
Deferred tax liabilities:
Capitalized computer software development costs(396)(1,192)
Net gains/losses on trading securities(1,993)(1,891)
Goodwill and intangible assets basis differences(1,399)(1,003)
Right of use asset(234)(364)
Deferred agent commissions(1,151)(1,221)
Total gross deferred tax liabilities(5,173)(5,671)
Net deferred tax liabilities$(1,772)$(2,627)
At April 30, 2022, the Company had approximately $1.2 million of various state net operating loss carryforwards which are available to offset future state taxable income, if any, through 2037. The Company has foreign branch operations in the United Kingdom and New Zealand. The branches have incurred losses since inception dating back to 2003. The losses have been utilized in the US federal jurisdiction but have not been utilized in the respective jurisdictions. At April 30, 2022, the Company had approximately $19 million of net operating loss carryforwards in these foreign jurisdictions, which are indefinitely available to offset future taxable income. As a result, the Company has recorded a deferred tax asset of $3.7 million related to these losses. Furthermore, the Company does not believe it will realize the benefit of these foreign net operating loss carryforwards and therefore, has established a full valuation allowance associated with this deferred tax asset.
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, 2022.
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, 2022, 2021 and 2020 we have recorded approximately $18,000, $25,000 and $34,000, 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.
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, 2022 and 2021, we had recorded a liability for potential penalties and interest of approximately $11,000 and $15,000, 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): 
20222021
Balance at beginning of the period$10 $15 
Decreases as a result of positions taken during prior periods(3)(5)
Increases as a result of positions taken during the current period— — 
Balance at April 30,$7 $10 

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 2004. We are no longer subject to U.S. federal income tax examination for years prior to 2018.

During the years ended April 30, 2022, 2021 and 2020 we recorded research and development state tax credits against payroll taxes of approximately $561,000, $555,000 and $427,000, respectively, which reduced general and administrative expenses by the same amount.