13. INCOME TAXES

Our provision for income taxes varied from the tax computed at the U.S. federal statutory income tax rates for the year ended June 30, 2026, 2025, and 2024 primarily due to the effects of state and local income taxes, net of federal tax benefit, excess tax benefit from share-based compensation, acquisition-related adjustments, and other permanent differences. Fiscal 2026 also included U.S. foreign tax credits, foreign tax effects related principally to Hong Kong operations, and tax effects of entity reorganization. Fiscal 2025 included one-time tax effects related to the Company's acquisitions of Pinehurst and AMS and related transaction costs. Fiscal 2024 included a one-time tax adjustment related to the Company's acquisition of SGB.

Income taxes paid, net of refunds, during the years ended June 30, 2025 and 2024 were $9.9 million and $17.4 million, respectively.

As of June 30, 2026 and June 30, 2025, we had an income tax receivable of $2.1 million and $4.6 million, respectively.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized by evaluating both positive and negative evidence. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As of June 30, 2026 and June 30, 2025, management concluded that it was more likely than not that the Company would be able to realize the benefit of the U.S. federal and state deferred tax assets. We based this conclusion on historical and projected operating performance, as well as our expectation that our operations will generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets. A tax valuation allowance was considered unnecessary, as management concluded that it was more likely than not that the Company would be able to realize the benefit of the U.S. federal and state deferred tax assets.

As of June 30, 2026, the consolidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal, state and foreign), resulting in a federal deferred tax liability of $10.3 million, a state deferred tax asset of $0.4 million, and a foreign deferred tax liability of $4.6 million. As of June 30, 2025, the consolidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal, state and foreign), resulting in a federal deferred tax liability of $12.0 million, a state deferred tax liability of $0.1 million, and a foreign deferred tax liability of $6.2 million. Our net foreign deferred tax liability will fluctuate as the value of the U.S. dollar changes with respect to foreign currencies. The Company intends to indefinitely reinvest the cumulative undistributed earnings held by its foreign subsidiaries.

We acquired $18.0 million of federal and $5.0 million of state net operating losses from our acquisition of SMI in April 2026. As of June 30, 2026, we had federal net operating loss carryforwards of $18.3 million and $25.9 million of state and local net operating loss carryforwards. The federal net operating losses carry forward indefinitely; the state net operating loss carryforwards start to expire in 2030.

The Company has taken or expects to take certain tax benefits on its income tax return filings that it has not recognized as a tax benefit (i.e., an unrecognized tax benefit) on its consolidated statements of income. The Company's measurement of its uncertain tax positions is based on management's assessment of all relevant information, including, but not limited to prior audit experience, audit settlement, or lapse of the applicable statute of limitations. Below is a reconciliation of net unrecognized tax benefits (in thousands):

In addition to the $0.6 million of accrued tax expense as shown in the table above, the Company has $0.4 million of interest and penalties accrued to date related to its uncertain tax positions. As of June 30, 2026, the amount of this accrued liability (inclusive of the uncertain tax deductions and the associated interest and penalty accrual) totaled $1.0 million, and, if recognized, would reduce the Company's effective tax rate.