Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

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Income Taxes
6 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

8. Income Taxes

 

On December 22, 2017, the United States government (“U.S.”) enacted significant changes to the U.S. tax law following the passage and signing of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (the “Tax Act”) (previously known as “The Tax Cuts and Jobs Act”). The Tax Act included significant changes to existing tax law, including a permanent reduction to the U.S. federal corporate income tax rate from 34% to 21%, a one-time repatriation tax on deferred foreign income, deductions, credits and business related exclusions.

 

On December 22, 2017, the SEC issued Staff Accounting Bulletin 118 (“SAB 118”). SAB 118 expresses views of the SEC regarding ASC Topic 740, Income Taxes (“ASC 740”) in the reporting period that includes the enactment date of the Tax Act. The SEC staff issuing SAB 118 (the “Staff”) recognized that a registrant’s review of certain income tax effects of the Tax Act may be incomplete at the time financial statements are issued for the reporting period that includes the enactment date, including interim periods therein. If a company does not have the necessary information available, prepared or analyzed for certain income tax effects of the Tax Act, SAB 118 allows a company to report provisional numbers and adjust those amounts during the measurement period not to extend beyond one year.

  

In accordance with SAB 118, the provision estimates recorded represent reasonable estimates of the effects of the Tax Act for which the analysis is not yet complete. As the Company completes its analysis of the effects of the Tax Act, including collecting, preparing and analyzing necessary information regarding foreign earnings and profits, performing and refining calculations and obtaining additional guidance from such standard setting and regulatory bodies as the U.S. Internal Revenue Services, U.S. Treasury Department and FASB, among others, it may record adjustments to the provisional estimates. The Company expects to finalize its provisional estimates at the earlier of the time it files its U.S. federal income tax return for the fiscal year ended March 31, 2018 or the end of the measurement period provided for under SAB 118, which is December 31, 2018. We have not made any measurement period adjustments related to these items during the six months ended September 30, 2018.

 

The following table sets forth the effective tax rates for the Company for the six months ended September 30, 2018 and 2017.

 

    Six months ended
September 30,
 
    2018     2017  
Statutory federal income tax rate     21.0%       34.0%  
State and local income taxes     8.1%       6.8%  
Permanent differences     12.6%       2.8%  
Minority investment in unconsolidated affiliate     -       2.9%  
Other     1.3%       0%  
Effective tax rate     43.0%       46.5%  

 

The decrease in the effective tax rate for the six months ended September 30, 2018 as compared with the six months ended September 30, 2017 was primarily attributable to the permanent reduction in federal tax rates from 34% to 21%, partly offset by an increase in certain stock based compensation expenses not deductible for tax purposes.