Federal, State and Local Income Taxes

3 Months Ended

Jul. 31, 2013

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)	2013		2012
Current tax expense:
Federal	$	216	$	448
State and local		28		73
		244		521
Deferred tax expense:
Federal		506		467
State and local		81		87
		587		554
Income tax provision:	$	831	$	1,075

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)	2013			2013
Federal tax benefit (liability):
Unrealized gains on securities available-for-sale	$	(137	)	$	(136	)
Operating lease exit obligation		-			13
Deferred professional fees		49			49
Deferred charges		292			265
Total federal tax benefit		204			191
State and local tax benefits:
Other		34			36
Total state and local tax benefits		34			36
Deferred tax asset, short term	$	238		$	227
	July 31,			April 30,
($ in thousands)	2013			2013
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		2,166			1,642
Other		410			262
Total federal tax liability		19,636			18,964
State and local tax liabilities (benefits):
Deferred gain on deconsolidation of EAM		2,253			2,243
Deferred non-cash post-employment compensation		(79	)		(79	)
Depreciation and amortization		276			208
Deferred professional fees		(9	)		(10	)
Total state and local tax liabilities		2,441			2,362
Deferred tax liability, long term	$	22,077		$	21,326

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 overall effective income tax rate, as a percentage of pre-tax ordinary income for the three months ended July 31, 2013 and July 31, 2012 was 36.51% and 37.71%, respectively. The Company’s annual effective tax rate may change 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 fluctuation in the effective income tax rate during fiscal 2014 is primarily attributable to a lower percentage of income subject to state and local taxes and an increase in the dividends received deduction.

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,
	2013			2012
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		2.24	%		2.93	%
Effect of dividends received deductions		-0.37	%		-0.22	%
Other, net		-0.36	%		0.00	%
Effective income tax rate		36.51	%		37.71	%

The Company believes that, as of July 31, 2013, 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 2010, 2011, and 2012 are subject to examination by the tax authorities, generally for three years after they were filed with the tax authorities.  In February 2012, the Internal Revenue Service (“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.  The Company’s tax returns for the fiscal years ended April 30, 2010 and 2011 are being examined by the City of New York.  The Company does not expect the audit examination to have a material effect on its financial statements.