INCOME TAXES

The Company and its non-Canadian subsidiaries file a consolidated federal income tax return. Provisions for income taxes include deferred taxes for temporary differences in the bases of assets and liabilities for financial and tax purposes, resulting from the use of the liability method of accounting for income taxes. At June 30, 2014, the current deferred tax asset primarily consists of temporary differences in the deductibility of prepaid expenses, accrued liabilities and unrealized gains on trading securities. The long-term deferred tax asset is composed primarily of unrealized losses and other than temporary impairments on available-for-sale securities and capital loss carryovers.

For federal income tax purposes at June 30, 2014, the Company has capital loss carryovers of approximately $754,000 expiring in fiscal year 2019. The Company also has charitable contribution carryovers of approximately $68,000 expiring in fiscal year 2018 and $34,000 expiring in fiscal year 2019.

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax amount will not be realized. At June 30, 2014 and 2013, a valuation allowance of $35,000 and $27,000, respectively, was included related to the charitable contribution carryover. No valuation allowance was included at June 30, 2012.

The reconciliation of income tax computed for continuing operations at the U.S. federal statutory rates to income tax expense is:



	Year Ended June 30,
(dollars in thousands)	2014			% of Pretax		2013		% of Pretax		2012		% of Pretax
Tax expense (benefit) at statutory rate - continuing operations	$	(421	)	34.0	%	$	24	34.0	%	$	905	34.0	%
Nondeductible gain on business combination	(99		)	8.0	%	—		—	%	—		—	%
Nondeductible membership dues	25			(2.0	)%	27		38.0	%	27		1.0	%
Nondeductible meals and entertainment	25			(2.0	)%	44		62.0	%	41		1.5	%
Other	(47		)	3.8	%	5		7.0	%	51		1.9	%
Total tax expense (benefit) - continuing operations	$	(517	)	41.8	%	$	100	141.0	%	$	1,024	38.4	%

Components of total tax expense (benefit) are as follows:



	Year Ended June 30,
(dollars in thousands)	2014			2013			2012
Continuing Operations
Current tax expense (benefit)	$	(904	)	$	91		$	1,307
Deferred tax expense (benefit)	387			9			(283		)
Total tax expense (benefit) - continuing operations	$	(517	)	$	100		$	1,024

Tax expense (benefit) - continuing operations	$	(517	)	$	100		$	1,024
Tax benefit - discontinued operations	(125		)	(85		)	(55		)
Total tax expense (benefit)	$	(642	)	$	15		$	969

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s deferred assets and liabilities using the effective statutory tax rate (34 percent for 2014 and 2013) are as follows:



	Year Ended June 30,
(dollars in thousands)	2014		2013
Book/tax differences in the balance sheet
Trading securities	84		238
Prepaid expenses	(142	)	(152	)
Accumulated depreciation	120		85
Available-for-sale securities	(176	)	(55	)
Equity method	—		(19	)
Accrued expenses	108		111
Stock-based compensation expense	103		117
Tax Carryovers
Capital loss carryover	252		549
Charitable contributions carryover	35		27
Valuation Allowance	(35	)	(27	)
Net deferred tax asset	349		874