Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.2.2
Income Taxes
 12 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

Note 18: Income Taxes

Deferred income taxes 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.

Income tax expense for the years ended September 30, 2022 and 2021 is as follows (in $000’s):

 

 

 

Year Ended

 

 

Year Ended

 

 

 

September 30,
2022

 

 

September 30,
2021

 

Current expense:

 

 

 

 

 

 

Federal

 

$

524

 

 

$

3,830

 

State

 

 

329

 

 

 

1,015

 

 

 

 

853

 

 

 

4,845

 

Deferred expense:

 

 

 

 

 

 

Federal

 

 

5,051

 

 

 

3,474

 

State

 

 

971

 

 

 

343

 

 

 

 

6,022

 

 

 

3,817

 

Total income tax expense

 

$

6,875

 

 

$

8,662

 

 

A reconciliation of the differences between the effective and statutory income tax rates for years ended September 30, 2022 and 2021:

 

 

 

Year Ended

 

 

Year Ended

 

 

 

September 30,
2022

 

 

September 30,
2021

 

Federal statutory rates

 

 

21.0

%

 

 

21.0

%

State income taxes, net of federal benefit

 

 

4.0

%

 

 

2.4

%

Permanent differences

 

 

3.2

%

 

 

(0.9

)%

Bankruptcy gain exclusion

 

 

(9.0

)%

 

 

0.0

%

Stock compensation

 

 

3.8

%

 

 

1.7

%

PPP loan forgiveness

 

 

0.0

%

 

 

(3.3

)%

Property and equipment adjustment

 

 

0.0

%

 

 

0.5

%

Change in valuation allowance

 

 

(0.2

)%

 

 

(0.6

)%

Other

 

 

(1.0

)%

 

 

1.0

%

Effective rate

 

 

21.8

%

 

 

21.8

%

 

At September 30, 2022 and 2021, deferred income tax assets and liabilities were comprised of (in $000’s):

 

 

 

 

 

 

 

 

 

 

September 30,
2022

 

 

September 30,
2021

 

Deferred income tax assets (liabilities):

 

 

 

 

 

 

Allowance for bad debts

 

$

53

 

 

$

15

 

Accrued expenses

 

 

(172

)

 

 

168

 

Inventory

 

 

1,132

 

 

 

836

 

Accrued compensation

 

 

150

 

 

 

127

 

Net operating loss

 

 

508

 

 

 

508

 

Tax credits

 

 

475

 

 

 

540

 

Stock compensation

 

 

265

 

 

 

1,466

 

Intangibles

 

 

(2,952

)

 

 

(2,491

)

Property & equipment

 

 

(8,843

)

 

 

(4,822

)

Right of use assets

 

 

(8,817

)

 

 

(7,616

)

Lease liabilities

 

 

9,609

 

 

 

9,136

 

Other

 

 

560

 

 

 

188

 

Less: Valuation allowance

 

 

(786

)

 

 

(851

)

Total deferred income tax asset (liability)

 

$

(8,818

)

 

$

(2,796

)

 

 

The Company has federal and state net operating loss carryforwards of none and approximately $7.3 million, respectively, as of September 30, 2022. State net operating loss amounts begin to expire in 2035. The Company has state tax credit carryforwards as of September 30, 2022 of approximately $0.6 million. The 2018 through 2021 tax years are open to examination by the various federal and state jurisdictions.

The Company evaluates all available evidence to determine if a valuation allowance is needed to reduce its deferred tax assets. Management has concluded that it is more likely than not that a portion of its existing tax benefits will not be realized. Accordingly, the Company has recorded a valuation allowance of approximately $0.8 million at September 30, 2022 to reduce its deferred tax assets.

On August 16, 2022, President Biden signed the Inflation Reduction Act which includes a new minimum tax on certain large corporations and an excise tax on stock buybacks. We do not anticipate this legislation will have a material impact for the Company.

The Company annually conducts an analysis of its tax positions and has concluded that it has no uncertain tax positions as of September 30, 2022. The Company’s policy is to record uncertain tax positions as a component of income tax expense.