INCOME TAXES

12 Months Ended

Sep. 30, 2011

Income Taxes

Income Tax Disclosure [Text Block]

NOTE 6 - INCOME TAXES

The provision for income taxes is as follows:

	2011	2010
Current:	$176,900	$327,500
Federal	91,400	90,200
State	268,300	417,700
Deferred:	157,200	9,900
Federal	300	6,000
State	$425,800	$433,600

The deferred tax assets (liabilities) are comprised of the following:

	2011		2010
	Current	Long-term	Current	Long-term
Deferred tax assets:
Federal	$  68,400	$         -	$  68,200	$         -
State	5,200	-	5,100	-
Deferred tax liabilities
Federal	-	(608,000)	-	(450,600)
State	-	(56,000)	-	(55,600)
	$  73,600	$(664,000)	$  73,300	$(506,200)

The deferred tax assets (liabilities) consist of the following temporary differences:

	2011	2010
Depreciation	$(663,900)	$(506,200)
Total gross deferred tax liabilities	(663,900)	(506,200)
Vacation accrual	25,100	24,600
Federal benefit of state taxes	48,400	48,700
Total gross deferred tax assets	73,500	73,300
	$(590,400)	$(432,900)

The effective income tax rate varies from the statutory federal income tax rate as follows:

	2011	2010
Statutory federal income tax rate	34.0%	34.0%
Increase (decrease):
State income taxes, net of federal benefit	5.8	5.8
Nondeductible variable costs of shareholder usage	6.0	6.0
Other miscellaneous adjustments	0.2	(0.0)
Effective Income Tax Rate	46.0%	45.8%

The Company uses the asset-liability method of computing deferred taxes in accordance with FASB Accounting Standards Codification (ASC) Topic 740 (previously Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes"). The difference between the effective tax rate and the statutory tax rates is due primarily to the effects of the graduated tax rates, state taxes net of the federal tax benefit and nondeductible variable costs of shareholder usage.

ASC Topic 740 requires, among other things, the recognition and measurement of tax positions based on a "more likely than not" (likelihood greater than 50%) approach. As of September 30, 2011 and 2010, the Company did not maintain any tax positions that did not meet the "more likely than not" threshold and, accordingly, all tax positions have been fully recorded in the provision for income taxes. It is the policy of the Company to consistently classify interest and penalties associated with income tax expense separately from the provision for income taxes. No interest or penalties associated with income taxes have been included in this calculation, or separately in the Statements of Income and Retained Earnings, and no significant increases or decreases are expected within the following twelve-month period. Although the Company does not maintain any uncertain tax positions, tax returns generally remain subject to examination by the Internal Revenue Service for fiscal years ending on or after September 30, 2008, and by the California Franchise Tax Board for fiscal years ending on or after September 30, 2007.