
	Year Ended September 30,				Nine Months Ended September 30, 2018
	2020		2019
	(In millions)
Current tax expense (benefit):
Federal	$	(7.6)	$	(0.3)	$	(0.5)
State and other	0.9		0.3		—
	(6.7)		—		(0.5)
Deferred tax expense (benefit):
Federal	21.2		9.1		(23.5)
State and other	1.9		0.3		(1.3)
	23.1		9.4		(24.8)
Income tax expense (benefit)	$	16.4	$	9.4	$	(25.3)


	Year Ended September 30,				Nine Months Ended September 30, 2018
	2020		2019
Federal statutory rate	21	%	21	%	21	%
State, net of federal benefit	3		1		4
Valuation allowance	—		—		(81)
Tax benefits previously unrecognized	(2)		—		—
Tax rate benefit in carryback years	(1)		—		—
Noncontrolling interests	—		(1)		(1)
Effective tax rate (benefit)	21	%	21	%	(57)	%

The effective tax rate for fiscal 2020 includes a tax benefit of $2.3 million related to the net operating loss (NOL) carryback provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which allows the Company to carryback a portion of its fiscal 2018 NOL. The carryback provisions result in the recognition of previously unrecognized tax benefits and the revaluation of deferred tax assets due to the utilization of NOLs at a higher tax rate in the carryback period. The Company's effective tax rate for the nine months ended September 30, 2018 also includes a benefit for the release of its federal valuation allowance and a portion of its state valuation allowance associated with its deferred tax assets. The effective tax rate for all periods includes an expense for state income taxes and nondeductible expenses and a benefit related to noncontrolling interests.


	September 30,
	2020		2019
	(In millions)
Deferred tax assets:
Real estate	$	10.5	$	10.2
Employee benefits	1.5		1.5
Net operating loss carryforwards	1.7		15.1
AMT credits	—		0.6
Accruals not deductible until paid	0.2		0.2
Total deferred tax assets	13.9		27.6
Valuation allowance	(1.5)		(3.3)
Total deferred tax assets, net of valuation allowance	12.4		24.3
Deferred tax liabilities:
Deferral of profit on lot sales	(18.1)		(6.4)
Convertible debt	—		(0.5)
Total deferred tax liabilities	(18.1)		(6.9)
Deferred tax (liability) asset, net	$	(5.7)	$	17.4

In October 2017, D.R. Horton 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. Any federal tax attributes or built-in losses and deductions that were limited in fiscal 2018 or 2019 have been fully utilized.

At September 30, 2020, the Company had no federal NOL carryforwards as a result of NOL carryback claims and taxable income in the current year. At September 30, 2020, the Company had tax benefits of $1.7 million related to state NOL carryforwards, of which $1.4 million will expire between 2030 and 2037 while the remaining $0.3 million do not have an expiration date.

The Company has a valuation allowance of $1.5 million and $3.3 million at September 30, 2020 and 2019 because it is more likely than not that a portion of the Company's state deferred tax assets, primarily 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 current year decrease in the valuation allowance is primarily attributable to the write-off of state deferred tax assets for NOLs which are not expected to be utilized, resulting in no impact to state tax expense. 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.

The Company is subject to a Tax Sharing Agreement with D.R. Horton. The agreement sets forth an equitable method for reimbursements of tax liabilities or benefits between the Company and D.R. Horton related to state and local income, margin or franchise tax returns that are filed on a unitary basis with D.R. Horton. In accordance with the agreement, the Company reimbursed D.R. Horton $0.2 million in fiscal 2020 for its tax expense generated in fiscal 2019, and D.R. Horton reimbursed the Company $0.4 million in fiscal 2019 for its tax benefit generated in the nine months ended September 30, 2018.

The Company files income tax returns in the U.S. and in various state jurisdictions. The federal statute of limitations for tax years prior to 2016 is closed and the statute of limitations in major state jurisdictions for tax years prior to 2016 is closed. The Company is not currently being audited by the IRS or any state jurisdictions.


	Year Ended September 30,				Nine Months Ended September 30, 2018
	2020		2019
	(In millions)
Balance at beginning of period	$	1.6	$	1.6	$	1.1
(Decrease) increase for tax positions taken in prior periods	(1.6)		—		0.5
Balance at end of period	$	—	$	1.6	$	1.6

The Company had no unrecognized tax benefits at September 30, 2020 as a result of the recognition of $1.6 million of previously unrecognized tax benefits during fiscal 2020. All of the $1.6 million of recognized tax benefits affected the Company’s effective tax rate and was attributable to the NOL carryback provisions of the CARES Act allowing previously uncertain tax attributes to be recognized.

The Company recognizes interest accrued related to unrecognized tax benefits in income tax expense. In fiscal years 2020, 2019 and in the nine months ended September 30, 2018, no significant interest related to unrecognized tax benefits was recognized. At September 30, 2020, there were no accrued interest or penalties.