Quarterly report pursuant to Section 13 or 15(d)

Note 9 - Income Taxes

v3.20.1
Note 9 - Income Taxes
 6 Months Ended
Mar. 31, 2020
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
Note
9.
Income Taxes
 
For the
three
and
six
months ended
March 31, 2020,
the Company recorded income tax expense of
$190,000
and
$313,000,
reflecting an effective tax rate of
20.3%
and
20.0%,
respectively.
For the
three
and
six
months ended
March 31, 2019,
the Company recorded a provision for income taxes of
$99,000
and
$395,000,
respectively, reflecting an effective tax rate of
21.2%
and
22.3%,
respectively.
The differences between the effective tax rate and the statutory tax rate were related to nondeductible meals and entertainment, nondeductible stock compensation, foreign derived intangibles deduction and research and development credits.
 
Deferred taxes recognize the impact of temporary differences between the amounts of the assets and liabilities recorded for financial statement purposes and these amounts measured in accordance with tax laws. The Company’s realization of deferred tax temporary differences is contingent upon future taxable earnings. The Company reviewed its deferred tax asset for expected utilization using a “more likely than
not”
criteria by assessing the available positive and negative factors surrounding its recoverability.
 
As of
March 31, 2020
and
September 30, 2019,
the Company had a remaining valuation allowance of approximately
$47,000
related to state net operating loss carry forwards the Company does
not
expect to utilize. Based on the Company’s analysis and review of long-term forecasts and all available evidence, the Company determined that there should be
no
further change in the valuation allowance for the
six
months ended
March 31, 2020.
 
As of
March 31, 2020,
we do
not
have any unrecognized tax benefits. It is the Company’s practice to recognize interest and penalties accrued on any unrecognize
d tax benefits as a component of income tax expense. The Company does
not
expect any material changes in its unrecognized tax positions over the next
12
months.