Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.21.4
Income Taxes
 12 Months Ended
Sep. 30, 2021
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, 2021 and 2020 is as follows:

 

 

 

Year Ended

 

 

Year Ended

 

 

 

September 30,
2021

 

 

September 30,
2020

 

Current expense:

 

 

 

 

 

 

Federal

 

$

3,830

 

 

$

—

 

State

 

 

1,015

 

 

 

887

 

 

 

 

4,845

 

 

 

887

 

Deferred expense:

 

 

 

 

 

 

Federal

 

 

3,474

 

 

 

4,160

 

State

 

 

588

 

 

 

(84

)

Change in valuation allowance

 

 

(245

)

 

 

(6

)

 

 

 

3,817

 

 

 

4,070

 

Total income tax expense

 

$

8,662

 

 

$

4,957

 

 

 

A reconciliation of the differences between the effective and statutory income tax rates for years ended September 30, 2021 and 2020:

 

 

 

Year Ended

 

 

Year Ended

 

 

 

September 30,
2021

 

 

September 30,
2020

 

Federal statutory rates

 

 

21.0

%

 

 

21.0

%

State income taxes, net of federal benefit

 

 

2.4

%

 

 

3.1

%

Permanent differences

 

 

(0.9

)%

 

 

0.2

%

Nondeductible transaction costs

 

 

—

 

 

 

1.3

%

Stock compensation

 

 

1.7

%

 

 

0.0

%

Bargain gain - purchase accounting

 

 

—

 

 

 

(2.0

)%

PPP loan forgiveness

 

 

(3.3

)%

 

 

—

 

Property and equipment adjustment

 

 

0.5

%

 

 

7.4

%

Change in valuation allowance

 

 

(0.6

)%

 

 

—

 

Other

 

 

1.0

%

 

 

0.7

%

Effective rate

 

 

21.8

%

 

 

31.7

%

 

At September 30, 2021 and 2020, deferred income tax assets and liabilities were comprised of:

 

 

 

 

 

 

 

 

 

 

September 30,
2021

 

 

September 30,
2020

 

Deferred income tax assets (liabilities):

 

 

 

 

 

 

Allowance for bad debts

 

$

15

 

 

$

247

 

Accrued expenses

 

 

168

 

 

 

—

 

Inventory

 

 

836

 

 

 

1,201

 

Accrued compensation

 

 

127

 

 

 

120

 

Net operating loss

 

 

508

 

 

 

2,429

 

Tax credits

 

 

540

 

 

 

489

 

Stock compensation

 

 

1,466

 

 

 

2,290

 

Intangibles

 

 

(2,491

)

 

 

(1,753

)

Property & equipment

 

 

(4,822

)

 

 

(5,476

)

Right of use assets

 

 

(7,616

)

 

 

(8,341

)

Lease liabilities

 

 

9,136

 

 

 

9,525

 

Payroll protection program loans

 

 

—

 

 

 

1,335

 

Other

 

 

188

 

 

 

51

 

Less: Valuation allowance

 

 

(851

)

 

 

(1,096

)

Total deferred income tax asset (liability)

 

$

(2,796

)

 

$

1,021

 

 

The Company has federal and state net operating loss carryforwards of none and approximately $7.3 million, respectively, as of September 30, 2021. State net operating loss amounts begin to expire in 2034. The Company has state tax credit carryforwards as of September 30, 2021 of approximately $0.7 million. The 2017 through 2020 tax years are open to examination by the various federal and state jurisdictions. The Company was under IRS examination for the September 30, 2017 tax year, however, the matter was closed with no proposed adjustments.

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, 2021 to reduce its deferred tax assets.

The Company annually conducts an analysis of its tax positions and has concluded that it has no uncertain tax positions as of September 30, 2021. The Company’s policy is to record uncertain tax positions as a component of income tax expense.