Income Taxes

12 Months Ended

Sep. 30, 2020

(12)	Income Taxes

As of the end of fiscal years 2020 and 2019, the Company’s gross liability for unrecognized tax benefits related to uncertain tax positions was

0.6

million. If the tax benefits of such amounts were recognized,

0.5

million of such amounts would decrease the Company’s effective income tax rate. The Company’s net liability for accrued interest and penalties was

0.27

million and $0.23 million as of September 30, 2020, and September 30, 2019, respectively. The Company has elected to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. During the years ended September 30, 2020, and September 30, 2019, the Company recognized approximately $0.04 million and $0.06 million in interest and penalties.

The Company’s activity was as follows:


	Fiscal Years Ended September 30,
	2020		2019
	(In thousands)
Beginning year balance	$	608	$	353
Decrease related to prior year tax positions		—		—
Increase related to current year tax positions		—		255
Settlements		—		—
Lapse of statutes of limitations		—		—

Ending year balance	$	608	$	608

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 12 months, but does not believe it would be material to its financial statements.

The Company’s income tax expense was as follows:


	Fiscal Years Ended September 30,
	2020		2019
	(In thousands)
Current
Federal	$	1,321	$	2,216
State		552		724

		1,873		2,940

Deferred
Federal		904		1,049
State		343		255

		1,247		1,304

Total	$	3,120	$	4,244

The principal reasons for the differences from the federal statutory income tax rate and the Company’s effective tax rate were as follows:


	Fiscal Years Ended September 30,
	2020			2019
Federal statutory income tax rate		21.0	%		21.0	%
State income taxes, net of federal benefit		4.3			3.9
Permanent and other differences		0.2			0.2
Difference due to executive compensation		1.1			—
Adjustment to beginning deferred taxes		1.4			0.4
Uncertain tax position allowance		0.4			1.9
Amendment of prior period tax return		(1.5	)		(1.3	)
Stock-based compensation		1.6			1.3
Other		—			0.4

Effective income tax rate		28.5	%		27.8	%

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities were as follows:


	Fiscal Years Ended September 30,
	2020			2019
	(In thousands)
Deferred tax assets
Accrued compensation	$	47		$	81
Stock compensation		13			14
State taxes		245			200
Capital loss carryforward		7			7

Gross deferred tax assets		312			302
Disallowed capital loss		(7	)		(7	)

Net deferred tax assets		305			295
Deferred tax liabilities
Property and equipment		(28	)		(42	)
Management contracts		(11,793	)		(10,522	)

Total deferred tax liabilities		(11,821	)		(10,564	)

Net deferred tax liabilities	$	(11,516	)	$	(10,269	)

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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