Federal, State and Local Income Taxes

3 Months Ended

Jul. 31, 2012

Income Tax Disclosure [Abstract]

Federal, State and Local Income Taxes:

Note 8 - Federal, State and Local Income Taxes:

In accordance with the requirements of the Income Tax Topic of the FASB’s ASC, the Company’s provision for income taxes includes the following:

	Three Months Ended July 31,
($ in thousands)	2012		2011
Current tax expense (benefit):
Federal	$	448	$	50
State and local		73		(121	)
		521		(71	)
Deferred tax expense:
Federal		467		1,006
State and local		87		210
		554		1,216
Income tax provision:	$	1,075	$	1,145

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,
($ in thousands)	2012			2012
Federal tax benefit (liability):
Net operating loss	$	-		$	126
Unrealized gains on securities available-for-sale		(61	)		(46	)
Operating lease exit obligation		128			153
Deferred professional fees		-			80
Deferred charges		135			76
Total federal tax benefit		202			389
State and local tax benefits:
Net operating loss		-			15
Other		19			38
Total state and local tax benefits		19			53
Deferred tax asset, short term	$	221		$	442
	July 31,			April 30,
($ in thousands)	2012			2012
Federal tax liability (benefit):
Deferred gain on deconsolidation of EAM	$	17,679		$	17,679
Deferred non-cash post-employment compensation		(619	)		(619	)
Depreciation and amortization		1,418			1,032
Other		117			120
Total federal tax liability		18,595			18,212
State and local tax liabilities (benefits):
Deferred gain on deconsolidation of EAM		2,087			2,182
Deferred non-cash post-employment compensation		(73	)		(76	)
Depreciation and amortization		168			127
Deferred professional fees		(5	)		(21	)
Total state and local tax liabilities		2,177			2,212
Deferred tax liability, long term	$	20,772		$	20,424

The Company’s net operating loss carryforward of approximately $360,000 was fully utilized during the three months ended July 31, 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.

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 reflects 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 may change during fiscal 2013 due to a number of factors including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-tax income, the Company’s geographic profit mix between tax jurisdictions, new tax laws, new interpretations of existing tax laws and rulings by and settlements with tax authorities.

The overall effective income tax rates, as a percentage of pre-tax income, for the three months ended July 31, 2012 and 2011, were 37.71% and 35.55%, respectively. The fluctuation in the effective income tax rate during the first quarter ended July 31, 2012, is attributable to a higher percentage of income subject to state and local taxes.

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,
	2012			2011
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		2.93	%		1.58	%
Effect of dividends received deductions		-0.22	%		-0.09	%
Other, net		-			-0.94	%
Effective income tax rate		37.71	%		35.55	%

The Company believes that, as of July 31, 2012, there were no material uncertain tax positions that would require disclosure under GAAP.

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 2009, 2010, and 2011 are subject to examination by the tax authorities, generally for three years after they were filed with the tax authorities. The Internal Revenue Service (“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 has concluded its examination of the Company’s federal income tax returns through the fiscal year 2010, which resulted in no changes that had any adverse effect on the Company’s financial statements.