Federal, State and Local Income Taxes

9 Months Ended

Jan. 31, 2016

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 January 31,						Nine Months Ended January 31,
($ in thousands)	2016			2015			2016			2015
Current tax expense:
Federal	$	906		$	716		$	2,916		$	2,668
State and local		62			9			189			161
Current tax expense		968			725			3,105			2,829
Deferred tax expense (benefit):
Federal		(271	)		198			(449	)		198
State and local		(1	)		(129	)		(222	)		(65	)
Deferred tax expense (benefit):		(272	)		69			(671	)		133
Income tax provision	$	696		$	794		$	2,434		$	2,962

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:

	January 31,		April 30,
($ in thousands)	2016		2015
Federal tax benefit (liability):
Unrealized gains on securities available-for-sale	$	26	$	(57	)
Operating lease deferred obligation		70		70
Deferred professional fees		76		34
Deferred charges		173		263
Total federal tax benefit		345		310
State and local tax benefits:
Other		30		46
Total state and local tax benefits		30		46
Deferred tax asset, short term	$	375	$	356

	January 31,			April 30,
($ in thousands)	2016			2015
Federal tax liability (benefit):
Deferred gain on deconsolidation of EAM	$	17,716		$	17,679
Deferred non-cash post-employment compensation		(619	)		(619	)
Depreciation and amortization		2,229			2,435
Other		332			401
Total federal tax liability		19,658			19,896
State and local tax liabilities (benefits):
Deferred gain on deconsolidation of EAM		1,735			1,970
Deferred non-cash post-employment compensation		(61	)		(69	)
Depreciation and amortization		218			271
Other		(22	)		(4	)
Total state and local tax liabilities		1,870			2,168
Deferred tax liability, long term	$	21,528		$	22,064

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 overall effective income tax rates, as a percentage of pre-tax ordinary income for the nine months ended January 31, 2016 and January 31, 2015 were 28.78% and 32.35%, respectively. The Company's annual effective tax rate will 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 and settlements with tax authorities. The fluctuation in the effective income tax rate during fiscal 2016 is primarily attributable to the affect from the scheduled reduction in the allocation factors on the state and local current and deferred tax liability (primarily associated with the gain on deconsolidation of EAM), favorable settlement of certain tax audits, dividend exclusion and an increase in the domestic production tax credits.

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,
	2016			2015
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		-1.38	%		0.09	%
Effect of dividends received deductions		-0.70	%		-0.36	%
Domestic production tax credit		-0.54	%		-0.62	%
Write-off of goodwill		-			-1.85	%
Settlement of tax audits		-3.60	%		-
Other, net		-			0.09	%
Effective income tax rate		28.78	%		32.35	%

The Company believes that, as of January 31, 2016, 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 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 2014, 2013, and 2012, are subject to examination by the tax authorities, generally for six years after they were filed with the tax authorities.   The Company has favorably concluded certain tax audits during the third quarter of fiscal 2016 that have provided the recognition of tax benefits resulting from a favorable outcome.  The Company’s tax returns for the fiscal years ended April 30, 2013 and 2012 are being examined by New York City (NYC). The Company does not expect the audit examinations to have a material effect on its financial statements.