The provision (benefit) for income taxes consisted of the following:


	Fiscal Year Ended June 30,
	2026			2025
Current:
Federal	$	962		$	3,686
State and local		411			1,260
Foreign		4,865			14,774
		6,238			19,720
Deferred:
Federal		(4,229	)		2,642
State and local		(2,578	)		(5,599	)
Foreign		(1,639	)		(1,466	)
		(8,446	)		(4,423	)
Total	$	(2,208	)	$	15,297

The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are as follows (in millions, except percentages):


	Fiscal Year Ended June 30,
	2026			%
Expected United States federal income tax at statutory rate	$	(64,424	)		21.0	%
State income taxes, net of federal benefit(a)		(2,413	)		0.8	%
Foreign tax effects:
UK
Impairment of goodwill(b)		19,803			(6.5	)%
Change in valuation allowance		11,162			(3.6	)%
Statutory tax rate difference between the U.K. and the U.S.		(4,689	)		1.5	%
UK other		548			(0.2	)%
Canada
Change in valuation allowance		4,119			(1.3	)%
Canada other		(1,958	)		0.6	%
Austria
Impairment of goodwill(b)		7,522			(2.5	)%
Austria other		(416	)		0.1	%
All other foreign jurisdictions		1,588			(0.5	)%
Cross-border tax laws		(1,283	)		0.4	%
Nontaxable or nondeductible Items:
Gain on sale of business		8,547			(2.8	)%
Impairment of goodwill(b)		5,984			(2.0	)%
R&W insurance proceeds		(5,439	)		1.8	%
Other		4,892			(1.6	)%
Change in valuation allowance(c)		12,949			(4.2	)%
Change in unrecognized tax benefits(d)		1,300			(0.4	)%
Provision for income taxes	$	(2,208	)		0.7	%


	Fiscal Year Ended June 30,
	2025			%
Expected United States federal income tax at statutory rate	$	(107,884	)		21.0	%
State income taxes, net of federal benefit		(11,431	)		2.2	%
U.S. tax on foreign earnings		3,466			(0.7	)%
Foreign income at different rates		(6,538	)		1.3	%
Change in valuation allowance(c)		28,757			(5.6	)%
Change in reserves for uncertain tax positions(d)		25,863			(5.0	)%
Impairment of goodwill and intangibles(b)		77,615			(15.2	)%
Gain on disposal of subsidiary		2,104			(0.4	)%
Stock-based compensation		393			(0.1	)%
Return to provision		(301	)		0.1	%
Loss on capital asset		1,004			(0.2	)%
Other		2,249			(0.4	)%
Provision for income taxes	$	15,297			(3.0	)%

(a) State taxes in California, Illinois, Pennsylvania, Texas, and New Jersey in aggregate make up the majority (greater than 50 percent) of the tax effect of this category.

(b) The Company recorded impairments of goodwill and certain intangible assets and most of the impairments did not have associated deferred tax liabilities. Therefore, the impact of these impairments is reflected as an impact to the effective tax rate.

(c) The Company estimated that it would not be able to utilize certain of its federal tax credit, federal tax losses and state tax loss carryovers due to its history of pretax losses and inability to carry back tax losses or credits for refunds. This negative evidence resulted in the Company increasing the valuation allowance on worldwide deferred tax assets of separately reported items in the year ended June 30, 2026 by $28,230 and in the year ended June 30, 2025 by $28,757.

(d) The Company recorded an unrecognized tax benefit that may not be fully supported under audit.

U.S. federal tax regulations include a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries and a measure to tax certain intercompany payments under the base erosion anti-abuse tax (“BEAT”) regime. For the fiscal years ended June 30, 2026 and 2025, the Company did not generate intercompany transactions that met the BEAT threshold but does have to include GILTI tax relating to the Company’s foreign subsidiaries.

The Company elected to account for GILTI tax as a current period cost and did not record an expense during the fiscal year ended June 30, 2026. The GILTI tax expense is included in the U.S. tax benefit on foreign earnings in the effective tax rate which also includes tax expense related to Subpart F income and unremitted earnings in total.

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 for income tax purposes. Deferred tax assets and liabilities consisted of the following:


	Fiscal Year Ended June 30,
	2026			2025
Deferred tax assets:
Net operating loss and tax credit carryforwards	$	87,270		$	74,121
Basis difference on inventory		1,936			4,301
Reserves not currently deductible		7,078			6,014
Basis difference on intangible assets		39,561			2,647
Lease ROU liability		10,713			15,905
Other comprehensive income		1,975			2,302
Stock-based compensation		569			1,342
Other		20,044			19,010
Total deferred tax asset before valuation allowance		169,146			125,642
Valuation allowance		(136,002	)		(96,383	)
Total deferred tax asset		33,144			29,259
Deferred tax liabilities
Basis difference on property and equipment		13,068			18,198
Basis difference on inventory		323			424
Basis difference on intangible assets		38,524			31,927
Lease ROU Assets		10,258			14,931
Unremitted earnings of foreign subsidiaries		2,294			3,980
Other		—			131
Total deferred tax liability		64,467			69,591
Net deferred tax liability(a)	$	(31,323	)	$	(40,332	)

(a) A deferred tax asset of $1,607 and nil is included within Other Assets, for fiscal years 2026 and 2025, respectively.

At June 30, 2026 and 2025, the Company had U.S. federal NOL carryforwards of approximately $106,684 and $113,258, respectively, certain of which will not expire until 2033. Certain of these federal loss carryforwards are subject to Internal Revenue Code Section 382, which imposes limitations on utilization following certain changes in ownership of the entity generating the loss carryforward. The Company had foreign NOL carryforwards of approximately $14,143 and $14,815 at June 30, 2026 and 2025, respectively, the majority of which are indefinite lived.

For the year ended June 30, 2026, the Company determined that $110,300 of foreign earnings are not permanently reinvested with a corresponding deferred tax liability of $2,294. The Company continues to reinvest $684,000 of undistributed earnings of its foreign subsidiaries and may be subject to additional foreign withholding taxes and U.S. state income taxes if it reverses its indefinite reinvestment assertion on these foreign earnings in the future. All other outside basis differences not related to earnings were impractical to account for at this period of time and are currently considered as being permanent in duration.

As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred tax assets will not be realized. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, the Company establishes a valuation allowance. The Company recorded valuation allowances in the amounts of $136,002 and $96,383 at June 30, 2026 and 2025, respectively.

As of June 30, 2026, the Company had $53,222 of unrecognized tax benefits, of which $49,411 represents an amount that, if recognized, would impact the effective tax rate in future periods. As of June 30, 2025, the Company had $51,923 of unrecognized tax benefits, of which $48,112 represents the amount that, if recognized, would impact the effective tax rate in future periods. Accrued liabilities for interest and penalties were $7,310 and $6,124 at June 30, 2026 and 2025, respectively.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and several foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to fiscal 2014. However, to the extent the Company generated NOLs or tax credits in closed tax years, future use of the NOL or tax credit carryforward balance would be subject to examination within the relevant statute of limitations for the year in which utilized. The Company is no longer subject to tax examinations in the U.K. for years prior to fiscal 2022. Given the uncertainty regarding when tax authorities will complete their examinations and the possible outcomes of their examinations, a current estimate of the range of reasonably possible significant increases or decreases of income tax that may occur within the next twelve months cannot be made. Although there are various tax audits currently ongoing, the Company does not believe the ultimate outcome of such audits will have a material impact on the Company’s consolidated financial statements.