(8)	Income Taxes

As of both September 30, 2016 and 2015, the Company’s gross liability for unrecognized tax benefits related to uncertain tax positions was $0.5 million, of which $0.3 million would decrease the Company’s effective income tax rate if the tax benefits were recognized. A reconciliation of the activity related to the liability for gross unrecognized tax benefits during the fiscal year ended September 30, 2016, are as follows:


	2016
	(In thousands)
Beginning year balance	$	493
Increase related to prior year tax positions		—
Increase related to current year tax positions		—
Settlements		—
Lapse of statutes of limitations		—

Ending year balance	$	493

The Company’s net liability for accrued interest and penalties was $0.17 million as of September 30, 2016. The Company has elected to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense.

The total amount of unrecognized tax benefits can change due to final regulations, audit settlements, tax examinations activities, lapse of applicable statutes of limitations and the recognition and measurement criteria under the guidance related to accounting for uncertainly in income taxes. The Company is unable to estimate what this change could be within the next twelve months, but does not believe it would be material to its financial statements.

The provision for income taxes was comprised of the following for the fiscal years ended September 30, 2016 and 2015:


	2016			2015
	(In thousands)
Current
Federal	$	6,324		$	5,017
State		511			1,089

		6,835			6,106

Deferred
Federal		1,539			1,444
State		(181	)		(136	)

		1,358			1,308

Total	$	8,193		$	7,414

The principal reasons for the differences from the federal statutory rate are as follows:


	2016			2015
Federal tax at statutory rate		35.0	%		35.0	%
True-up of prior year’s tax provision		-1.8			-2.1
State tax at statutory rate		2.6			3.9
Permanent and other differences		0.3			0.2
Uncertain tax position allowance		0.2			2.4

Effective Tax Rate		36.3	%		39.4	%

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities as of September 30, 2016 and 2015, are presented below:


	2016			2015
	(In thousands)
Current deferred tax assets:
Accrued compensation	$	61		$	69
Stock Compensation		138			137
State taxes		408			476
Capital loss carryforward		10			11

Total deferred tax assets		617			693
Less: disallowed capital loss		(10	)		(10	)

Net deferred tax assets		607			683

Noncurrent deferred tax liabilities:
Property and equipment		(50	)		(55	)
Management contracts		(10,381	)		(9,093	)

Total deferred tax liabilities		(10,431	)		(9,148	)

Net deferred tax liabilities	$	(9,824	)	$	(8,465	)

The tax benefits in 2016 and 2015 for share based compensation awards that will result in future tax deductions are included in deferred tax assets. The Company accounts for Additional Paid in Capital (APIC) adjustments related to tax deductions in excess of book deductions for stock based compensation using the with-and-without method, recognizing a windfall benefit to APIC only after considering all other tax benefits presently available to it.