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Note 9 - Income Taxes
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6 Months Ended |
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Mar. 31, 2013
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| Income Tax Disclosure [Text Block] |
Note
9. Income Taxes
For
the three months ended March 31, 2013, the Company recorded a
provision for income taxes of approximately $427,000,
reflecting an effective tax rate of 43.9%. The primary
difference between the effective tax rate and the statutory
tax rate is related to nondeductible meals and entertainment
and expenses related to equity award compensation.
During
the fourth quarter ended September 30, 2012, the Company
reversed a substantial portion of its deferred tax asset
valuation allowance to record the amount of deferred tax
assets that we believe are more likely than not to be
realized. This determination was based on weighing
both the positive and negative evidence available including,
but not limited to, our earnings history, our projected
future taxable income, our business strategy and the nature
of each of our deferred tax assets. The reduction
in the valuation allowance in the fourth quarter of fiscal
year 2012 resulted in a non-cash income tax benefit of
approximately $3.5 million. As of September 30,
2012, the Company had a remaining valuation allowance of
approximately $975,000 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 has
determined that there should be no change in this existing
valuation allowance in the current quarter.
For
the three months ended March 31, 2012, the Company recorded a
provision for income taxes of approximately $41,000,
reflecting an effective tax rate of 23.9%. For the
three months ended March 31, 2012, the Company’s tax
provision included estimated current federal alternative
minimum taxes and state franchise taxes, but was primarily
related to deferred tax expense related to book and income
tax basis difference in goodwill on prior asset
acquisitions. The change in valuation allowance
was $447,000. This change consisted of $473,000 of
tax benefit as a result of a reduction in valuation allowance
after considering current financial condition and potential
future taxable income. This reduction was
partially offset by a $26,000 increase in valuation allowance
from the current year AMT tax credit generated as its
utilization does not meet the “more likely than
not” criteria.
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
net operating loss carry-forward and other 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, 2013, we do not have any unrecognized tax
benefits. It is the Company’s practice to
recognize interest and penalties accrued on any unrecognized
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.
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