NOTE 7: Income Taxes

The provisions for income taxes for the years ended September 30, 2019 and 2018 are as follows:

	2019		2018
Current:
Federal	$	497,780	$	497,500
State		215,100		179,100
		712,880		676,600
Deferred:
Federal		(61,900)		(303,400)
State		(13,600)		13,100

Provision for income taxes	$	637,380	$	386,300

The Company uses the asset-liability method of computing deferred taxes in accordance with FASB ASC Topic 740. The difference between the effective tax rate and the statutory tax rates is due primarily to the impact of state taxes net of the federal tax benefit and nondeductible variable costs of shareholder usage.

At September 30, 2019 and 2018, the deferred income tax liabilities consisted of the following:

	2019		2018
Deferred tax assets (liabilities):
Federal	$	(387,300)	$	(449,200)
State		(57,500)		(71,100)

Net deferred income taxes	$	(444,800)	$	(520,300)

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. The majority of the balance is due to timing differences of depreciation expense, caused by the use of accelerated depreciation methods for tax calculations.

At September 30, 2019 and 2018, the deferred income tax liabilities consisted of the following temporary differences:

	2019		2018

Depreciation	$	(533,000)	$	(566,100)
Unrealized gain on investments		-		(33,200)
Total gross deferred tax liabilities		(533,000)		(599,300)

Vacation accrual		33,000		24,400
Federal benefit of state taxes		55,200		54,600
Total gross deferred tax assets		88,200		79,000

	$	(444,800)	$	(520,300)

There were no net operating loss or tax credit carryforwards for the year ended September 30, 2019 or 2018 for federal or state.