Federal, State and Local Income Taxes:

3 Months Ended

Jul. 31, 2011

Income Tax Disclosure [Abstract]

Federal, State and Local Income Taxes:

Note 8-Federal, State and Local Income Taxes:

The Company computes its income tax provision in accordance with the requirements of the Income Tax Topic of the FASB’s ASC.

The provision for income taxes includes the following:

	Three months ended July 31,
	2011			2010
	(in thousands)
Current tax expense/(benefit):
Federal	$	50		$	125
State and local		(92	)		-
		(42	)		125
Deferred tax expense:
Federal		1,006			1,064
State and local		181			77
		1,187			1,141
Income tax provision:	$	1,145		$	1,266

Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. The tax effect of temporary differences giving rise to the Company’s deferred tax asset and deferred tax liability are as follows:

	July 31,			April 30,
	2011			2011
	(in thousands)
Short term deferred tax asset
Federal tax benefit from net operating loss	$	1,220		$	2,226
State and city tax benefit from net operating loss		87			268
Unrealized gains on securities held for sale		(34	)		(34	)
Depreciation and amortization		-			-
Tax benefit on operating lease exit obligation		182			211
Deferred professional fees		109			109
Deferred charges		192			192
Other, net		50			50
Deferred tax asset	$	1,806		$	3,022
	July 31,			April 30,
	2011			2011
	(in thousands)
Long term deferred tax liability
Federal tax liability for deferred gain on EAM	$	17,679		$	17,679
Federal tax benefit deferred non-cash compensation		(619	)		(619	)
Federal tax benefit on lease exit obligation		(108	)		(108	)
Federal tax benefit on depreciation and amortization		(390	)		(364	)
State and local tax liability for deferred gain on EAM		2,132			2,132
State and local tax benefit deferred non-cash compensation		(62	)		(62	)
State and local tax benefit on lease exit obligation		(25	)		(25	)
State and local tax benefit on depreciation and amortization		(45	)		(45	)
State and local tax benefit on deferred professional fees		(14	)		(14	)
Deferred tax liability	$	18,548		$	18,574

The Company’s net operating loss carryforward of approximately $6,361,000 is expected to be fully utilized during the fiscal year ending April 30, 2012. The tax effect of temporary differences giving rise to the Company’s long-term deferred tax liability is primarily a result of the federal, state, and local taxes related to the $50,510,000 gain from deconsolidation of the Company’s asset management and mutual fund distribution subsidiaries partially offset by the long-term tax benefit related to the non-cash post-employment compensation of $1,770,000 granted to VLI’s former employee and the benefit related to the Company’s exit lease obligation of $914,000 all recognized in fiscal 2011.

At the end of each interim reporting period, the Company estimates the effective income tax rate to apply for the full year. The Company uses the effective income tax rate determined to provide for income taxes on a year-to-date basis and reflect the tax effect of any tax law changes and certain other discrete events in the period in which they occur.

The annual effective tax rate during fiscal 2012 changes due to a number of factors including but not limited to an increase or decrease in the ratio of income or loss to pre-tax income for items that do not have tax consequences, the Company’s geographic profit mix between tax jurisdictions, new tax laws, new interpretations of existing tax law and rulings by and settlements with tax authorities.

The overall effective income tax rate, as a percentage of pre-tax income, during the three months ended July 31, 2011 and 2010, were 35.55% and 35.33%, respectively.

The Company believes that, as at July 31, 2011, there were no material uncertain tax positions that would require disclosure under GAAP.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate to pretax income as a result of the following:

	Three months ended July 31,
	2011			2010
U.S. statutory federal rate		35.00	%		35.00	%
Increase/(decrease) in tax rate from:
State and local income taxes, net of federal income tax benefit		1.58	%		1.39	%
Effect of tax exempt income and dividend deductions		-0.09	%		0	%
Domestic production tax credit		-0.94	%		0	%
Other, net		0	%		-1.06	%
Effective income tax rate		35.55	%		35.33	%

The Company is included in the consolidated federal income tax return of the Parent. The Company has a tax sharing agreement which requires it to make tax payments to the Parent equal to the Company’s liability/(benefit) as if it filed a separate return.

The Company’s federal income tax returns (included in the Parent’s consolidated returns) and state and city tax returns for fiscal years ended April 30, 2008, 2009, and 2010 are subject to examination by the tax authorities, generally for three years after they were filed. The IRS and New York State tax authorities have recently concluded an examination for the years ended through April 30, 2008, which resulted in no changes that had any adverse effect on the Company’s financial statements. More recently, the IRS commenced an audit of the fiscal year 2010.