v3.26.3
Income Tax
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Tax

Note 16 - Income Tax

 

The Company has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax liabilities is principally dependent upon achievement of projected future taxable income.

 

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. The Company has no valuation allowance as of June 30, 2026 and 2025.

 

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. For businesses, the Act reduces the corporate federal tax rate from a maximum of 35% to a flat 21% rate. The rate reduction took effect on January 1, 2018. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through income tax expense.

 

The components of income tax expense (benefit) are as follows:

 

   June 30, 2026   June 30, 2025 
Current:        
Federal  $2,440,385   $1,935,372 
State   

1,437,540

    1,050,770 
Current income tax expense   

3,877,925

    2,986,142 
Deferred:          
Federal   

(204,258

)   403,941 
State   

(131,129

)   98,514 
Deferred income tax expense   

(335,387

)   502,455 
Total income tax expense  $

3,542,538

   $3,488,597 

 

Income tax expense differed from the amount computed using the U.S. federal income tax rate of 21% for June 30, 2026 and 2025 as follows:

 

   June 30, 2026   June 30, 2025 
Statutory U.S. federal income tax  $

2,663,224

   $2,314,794 
Non-deductible items   

93,708

    (123,961)
Change in deferred items   

-

    417,037 
Provision to return   

(100,295

)   - 
State income taxes, net of federal benefit   

916,825

    769,790 
Other   

(30,924

)   110,937 
Income tax expense  $

3,542,538

   $3,488,597 

 

 

Significant components of the Company’s deferred income tax assets included in deferred income taxes, non-current on the balance sheets are as follows:

 

   June 30, 2026   June 30, 2025 
Deferred tax assets:          
Lease liability and deferred rent  $

4,291,479

   $4,492,549 
Allowance for doubtful accounts   

558,131

    503,900 
Accrued bonuses and vacation   

589,547

    582,994 
Non-cash compensation   

643,308

    109,633 
Deferred tax assets gross   

6,082,465

    5,689,076 
Valuation allowance   

-

    - 
Deferred tax assets   

6,082,465

    5,689,076 
          
Deferred tax liability:          
Right of use asset   

(4,271,986

)   (4,503,369)
Property and equipment and intangible assets   

(1,079,546

)   (790,161)
Deferred tax liability   

(5,351,532

)   (5,293,530)
           
Net deferred tax asset  $

730,933

   $395,546 

 

The Company is subject to taxation in the United States and the state of California. As of June 30, 2026, the earliest tax year still subject to examination for federal purposes is the fiscal year ended June 30, 2022 and state purposes is the fiscal year ended June 30, 2021.