NOTE 7: INCOME TAXES

The provision for income taxes for the three months and nine months ending June 30, 2020 and 2019 is as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019
Income tax expense (benefit)	$	(3,300)	$	275,000	$	91,100	$	411,380

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 effects of state taxes net of the federal tax benefit and nondeductible variable costs of shareholder usage.

As of June 30, 2020, September 30, 2019, and June 30, 2019, the Company’s deferred tax liability was $438,800, $444,800, and $449,000, respectively. 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.