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Income Taxes
9 Months Ended
Jun. 30, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company's effective tax rate from continuing operations was 18% and 20% for the three and nine months ended June 30, 2019. The Company’s effective tax rate is less than the statutory tax rate primarily due to tax benefits for noncontrolling interests. The Company's effective tax rate from continuing operations was 1% for the three months ended June 30, 2018, which included the impact of the Tax Cuts and Jobs Act (Tax Act) and a tax benefit from the release of a portion of its valuation allowance as the result of the realization of certain deferred tax assets. The Company’s effective tax rate from continuing operations was 268% for the nine months ended June 30, 2018 which included nondeductible transaction costs related to the Merger, the impairment of nondeductible goodwill related to the Company's oil and gas operations, other adjustments to the Company's valuation allowance as a result of the generation and utilization of its deferred tax assets, and the impact of the Tax Act. The Company’s effective tax rates for all periods include the effect of state income taxes, nondeductible items and benefits for noncontrolling interests.
At June 30, 2019 and September 30, 2018, deferred tax assets, net of deferred tax liabilities, were $24.3 million and $30.3 million, offset by a valuation allowance of $3.3 million and $3.4 million for the portion of the deferred tax assets that the Company has determined is more likely than not to be unrealizable. The valuation allowance was recorded because it is more likely than not that a portion of the Company's state deferred tax assets, primarily net operating loss (NOL) carryforwards, will not be realized because the Company is no longer operating in some states or the NOL carryforward periods are too brief to realize the related deferred tax asset. The Company will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance on its deferred tax assets. Any reversal of the valuation allowance in future periods will impact the effective tax rate.
On October 5, 2017, D.R. Horton Inc. acquired 75% of the Company’s common stock resulting in an ownership change under Section 382 of the Internal Revenue Code. Section 382 limits the Company’s ability to use certain tax attributes and built-in losses and deductions in a given year. The Company’s tax attributes or built-in losses and deductions that were limited in 2017 or 2018 are expected to be fully utilized in future years with the exception of some state NOL carryforwards.
The Company's unrecognized tax benefits totaled $1.1 million at June 30, 2019, all of which would affect its effective tax rate, if recognized.