Income Taxes

6 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesREP LLC became a taxable entity as a result of its Merger with Tengasco on February 26, 2021. See further discussion in Note 4 - Business Combinations. While REP LLC was organized as a limited liability company, taxable income passed through to its unit holders. Accordingly, a provision for federal and state corporate income taxes has been made only for the operations of REP LLC from February 27, 2021 through March 31, 2021 in the accompanying consolidated financial statements. Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted tax rates. Upon the Merger into a corporation on February 26, 2021, the Company established a $13.6 million provision for deferred income taxes. The majority of this deferred tax liability was related to a change in tax status as reflected in the rate reconciliation table below.

The components of the Company's consolidated provision for income taxes from continuing operations are as follows:

	Three Months Ended March 31,				Six Months Ended March 31,
	2021		2020		2021		2020
	($ in thousands)				($ in thousands)
Current income tax expense:
Federal	$	780	$	—	$	780	$	—
State	363		—		(2)		—
Total current income tax expense	1,143		—		778		—
Deferred income tax expense:
Federal	14,006		—		14,006		—
State	(918)		—		(1,068)		—
Total deferred income tax expense	13,088		—		12,938		—
Total income tax expense	$	14,231	$	—	$	13,716	$	—

A reconciliation of the statutory federal income tax rate to the Company's effective income tax rate is as follows:

	Three Months Ended March 31,				Six Months Ended March 31,
	2021		2020		2021		2020
	($ in thousands)				($ in thousands)
Tax at statutory rate	21.0	%	21.0	%	21.0	%	21.0	%
Nondeductible compensation	(0.3)	%	—	%	(0.2)	%	—	%
Transaction costs	(0.4)	%	—	%	(0.3)	%	—	%
State income taxes, net of federal benefit	(2.5)	%	—	%	0.1	%	—	%
Change in Tax Status	(71.6)	%	—	%	(49.6)	%	—	%
Income Subject to Taxation by   REP LLC's Unitholders	(20.9)	%	(21.0)	%	(20.9)	%	(21.0)	%
Effective income tax rate	(74.7)	%	—	%	(49.9)	%	—	%

The Company's federal income tax returns for the years subsequent to September 30, 2017 remain subject to examination. The Company's income tax returns in major state income tax jurisdictions remain subject to examination for various periods subsequent to September 30, 2017. The Company currently believes that all other significant filing positions are highly certain and that all of its other significant income tax positions and deductions would be sustained under audit or the final resolution would not have a material effect on the consolidated financial statements. Therefore, the Company has not established any significant reserves for uncertain tax positions.