Note 8 - Federal, State and Local Income Taxes

9 Months Ended

Jan. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

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 January 31,						Nine Months Ended January 31,
($ in thousands)	2024			2023			2024			2023
Current tax expense:
Federal	$	1,195		$	1,191		$	3,657		$	3,581
State and local		469			364			979			831
Current tax expense		1,664			1,555			4,636			4,412
Deferred tax expense (benefit):
Federal		288			184			(18	)		85
State and local		(107	)		(68	)		(171	)		(28	)
Deferred tax expense (benefit):		181			116			(189	)		57
Income tax provision	$	1,845		$	1,671		$	4,447		$	4,469

On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act (the "Tax Act"), was enacted. The Tax Act lowered the U.S. federal income tax rate ("Federal Tax Rate") from 35% to 21% effective January 1, 2018.  Accordingly, the Company computes Federal income tax expense using the Federal Tax Rate of 21% in fiscal year 2019 and each year thereafter.  

The overall effective income tax rates, as a percentage of pre-tax ordinary income for the nine months ended January 31, 2024 and January 31, 2023 were 23.80% and 24.15%, respectively. The lower effective tax rate during nine months ended January 31, 2024 as compared to January 31, 2023, is primarily a result of a decrease in the state and local income tax rate to 3.04% from 3.39% due to changes in state and local income tax allocations. The Company's annualized overall effective tax rate fluctuates due to a number of factors, in addition to changes in tax law, including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-income tax, the Company's geographic profit mix between tax jurisdictions, taxation method adopted by each locality, new interpretations of existing tax laws and rulings and settlements with tax authorities.   

Deferred income taxes, a liability, 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 long-term deferred tax liability are as follows:

	January 31,			April 30,
($ in thousands)	2024			2023
Federal tax liability (benefit):
Deferred gain on deconsolidation of EAM	$	10,669		$	10,669
Deferred non-cash post-employment compensation		(372	)		(372	)
Depreciation and amortization		70			59
Unrealized gain/(loss) on fixed income securities held for sale		(7	)		99
Unrealized gain on equity securities		895			919
Right of Use Asset		(154	)		(174	)
Deferred charges		(133	)		(136	)
Other		(461	)		(432	)
Total federal tax liability		10,507			10,632
State and local tax liabilities (benefits):
Deferred gain on deconsolidation of EAM		2,252			2,062
Deferred non-cash post-employment compensation		(78	)		(72	)
Depreciation and amortization		15			125
Unrealized gain/(loss) on fixed income securities held for sale		(2	)		19
Unrealized gain on equity securities		189			178
Other		(61	)		185
Total state and local tax liabilities		2,315			2,497
Deferred tax liability, long-term	$	12,822		$	13,129

At the end of each interim reporting period, the Company estimates the effective income tax rate to apply for the full fiscal 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 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:

	Nine Months Ended January 31,
	2024			2023
U.S. statutory federal tax rate		21.00	%		21.00	%
Increase (decrease) in tax rate from:
State and local income taxes, net of federal income tax benefit		3.04	%		3.39	%
Effect of dividends received deductions		(0.24	)%		(0.25	)%
Other, net		-			0.01	%
Effective income tax rate		23.80	%		24.15	%

The Company believes that, as of January 31, 2024, 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.  Beginning with the fiscal year ended April 30, 2017, the Company files combined income tax returns with the Parent on a unitary basis in certain states.  

The Company’s federal income tax returns (included in the Parent’s consolidated returns) and state and city tax returns for fiscal years ended 2020 through 2022, are subject to examination by the tax authorities, generally for three years after they are filed with the tax authorities.