Income Taxes

6 Months Ended

Mar. 31, 2013

Income Taxes [Abstract]

Income Taxes

(5) Income Taxes

The following is our tax position at March 31, 2013 and 2012:

The provision (benefit) for income taxes comprised of the following for the six months ended March 31, 2013 and 2012:

	3/31/2013		3/31/2012
Current
Federal	$	574,600	$	(5,300	)
State		85,100		5,600
		659,700		300
Deferred
Federal		540,600		270,600
State		141,100		76,800
		681,700		347,400
Total	$	1,341,400	$	347,700

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities as of March 31, 2013 and September 30, 2012 are presented below:

	3/31/2013			9/30/2012
Current deferred tax assets:
Accrued compensation	$	24,400		$	23,900
Deferred rent		25,200			35,900
Capital loss carryforward		110,400			—
State taxes		—			9,700
Charitable contribution carryover		74,000			96,200
Gross deferred tax assets		234,000			165,700
Less: Disallowed capital loss		(110,400	)		—
Net deferred tax assets		123,600			165,700
Noncurrent deferred tax liabilities:
Net operating loss		—			44,800
Property and equipment		(800	)		(7,300	)
Management contracts		(5,166,300	)		(4,566,600	)
Total deferred tax liabilities		(5,167,100	)		(4,529,100	)
Net deferred tax liabilities	$	(5,043,500	)	$	(4,363,400	)

The Company files U.S. federal and state tax returns and has determined that its major tax jurisdictions are the United States and California. The tax years ended in 2010 through 2012 remain open and subject to examination by the appropriate governmental agencies in the U.S., and the 2009 through 2012 tax years remain open in California.

The Company’s effective tax rates for the six months ended March 31, 2013 and 2012, were 41.6% and 46.6%, respectively, and differ from the federal statutory rate of 34% for the following principal reasons:

	3/31/2013			3/31/2012
Federal tax at statutory rate		34.00	%		34.00	%
State tax at statutory rate		5.83	%		5.83	%
Permanent differences		0.38	%		6.78	%
Disallowed capital loss		1.35	%		—
Effective Tax Rate		41.56	%		46.61	%

The effective tax rate, which is normally about 40%, was higher for the current period ended March 31, 2013 due to a disallowed capital loss carryforward created by the loss on the sale of the available for sale investment. The effective tax rate for the prior period ended March 31, 2012 was higher due to a one-time revaluation of the Company’s state deferred tax liabilities to reflect a higher blended state tax rate.