Income Taxes	9 Months Ended
Jun. 30, 2020
Income Taxes
Income Taxes	3. Income Taxes On December 22, 2017, the U.S. government enacted the Tax Act, which made broad and complex changes to the Code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 34 percent to 21 percent; (2) bonus depreciation that will allow for full expensing of qualified property; (3) elimination of the corporate AMT and changing how existing AMT credits can be realized; (4) a new limitation on deductible interest expense; (5) the repeal of the domestic production activity deduction; and (6) limitations on the use of NOLs generated after December 31, 2017, to 80 percent of taxable income. Income tax effects resulting from changes in tax laws are accounted for by the Company in accordance with the authoritative guidance, which requires that these tax effects be recognized in the period in which the law is enacted and the effects are recorded as a component of the provision for income taxes from continuing operations. The Tax Act made significant changes to the U.S. corporate income tax system, including reducing the U.S. federal corporate tax rate to 21 percent, effective January 1, 2018. The Tax Act also eliminated the previous carryback period for NOLs of two years and permits an indefinite carryforward period. In March 2020, in response to the COVID-19 pandemic, the CARES Act was signed into law to provide emergency assistance to affected individuals, families, and businesses. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses. The CARES Act amends the NOL provisions of the Tax Act, allowing for the carryback of losses arising in tax years beginning before December 31, 2017, to each of the two taxable years preceding the taxable year of loss. An estimated $1,500,000 of pre-tax NOL will be carried back two years to fully offset taxable income. This carryback frees up previously utilized R&D credits, resulting in an estimated increase in R&D credit carryforward of $196,000. The carryback will create approximately $16,000 of AMT tax, which will be refunded. The cash impact of this carryback is $309,412. An income tax receivable was recorded for $310,135 as of the quarter ended March 31, 2020. The income tax expense for the three months ended June 30, 2020 was $8,616 as compared to an income tax expense of $0 for the three months ended June 30, 2019. The effective tax rate for the three months ended June 30, 2020 was 0.7% and differs from the statutory tax rate primarily due to an increase in the NOL usage due to an increase in pretax book income and the release of the valuation allowance. This loss utilization both decreased the deferred tax asset and the valuation allowance. For the three months ended June 30, 2020, the valuation allowance decreased by approximately $243,000. The effective tax rate for the three months ended June 30, 2019 was 0% and differs from the statutory tax rate primarily due to net operating loss realization. This loss realization both decreased the deferred tax asset and the valuation allowance. For the three months ended June 30, 2019, the valuation allowance decreased by approximately $565,000. The income tax benefit for the nine months ended June 30, 2020 was $300,786 as compared to an income tax expense of $7,794 for the nine months ended June 30, 2019. The effective tax benefit rate for the nine months ended June 30, 2020 was 17.4% and differs from the statutory tax rate primarily due to the income tax benefit associated with the NOL carryback provisions under the CARES Act and the release of the valuation allowance. This loss utilization both decreased the deferred tax asset and the valuation allowance. For the nine months ended June 30, 2020, the valuation allowance decreased by approximately $437,000. The effective tax rate for the nine months ended June 30, 2019 was 0.9% and differs from the statutory tax rate primarily due to net operating loss realization. This loss realization both decreased the deferred tax asset and the valuation allowance. For the nine months ended June 30, 2019, the valuation allowance decreased by approximately $811,000.

3. Income Taxes

On December 22, 2017, the U.S. government enacted the Tax Act, which made broad and complex changes to the Code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 34 percent to 21 percent; (2) bonus depreciation that will allow for full expensing of qualified property; (3) elimination of the corporate AMT and changing how existing AMT credits can be realized; (4) a new limitation on deductible interest expense; (5) the repeal of the domestic production activity deduction; and (6) limitations on the use of NOLs generated after December 31, 2017, to 80 percent of taxable income.

Income tax effects resulting from changes in tax laws are accounted for by the Company in accordance with the authoritative guidance, which requires that these tax effects be recognized in the period in which the law is enacted and the effects are recorded as a component of the provision for income taxes from continuing operations.

The Tax Act made significant changes to the U.S. corporate income tax system, including reducing the U.S. federal corporate tax rate to 21 percent, effective January 1, 2018. The Tax Act also eliminated the previous carryback period for NOLs of two years and permits an indefinite carryforward period.

In March 2020, in response to the COVID-19 pandemic, the CARES Act was signed into law to provide emergency assistance to affected individuals, families, and businesses. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses. The CARES Act amends the NOL provisions of the Tax Act, allowing for the carryback of losses arising in tax years beginning before December 31, 2017, to each of the two taxable years preceding the taxable year of loss. An estimated $1,500,000 of pre-tax NOL will be carried back two years to fully offset taxable income. This carryback frees up previously utilized R&D credits, resulting in an estimated increase in R&D credit carryforward of $196,000. The carryback will create approximately $16,000 of AMT tax, which will be refunded. The cash impact of this carryback is $309,412. An income tax receivable was recorded for $310,135 as of the quarter ended March 31, 2020.

The income tax expense for the three months ended June 30, 2020 was $8,616 as compared to an income tax expense of $0 for the three months ended June 30, 2019.

The effective tax rate for the three months ended June 30, 2020 was 0.7% and differs from the statutory tax rate primarily due to an increase in the NOL usage due to an increase in pretax book income and the release of the valuation allowance. This loss utilization both decreased the deferred tax asset and the valuation allowance. For the three months ended June 30, 2020, the valuation allowance decreased by approximately $243,000.

The effective tax rate for the three months ended June 30, 2019 was 0% and differs from the statutory tax rate primarily due to net operating loss realization. This loss realization both decreased the deferred tax asset and the valuation allowance. For the three months ended June 30, 2019, the valuation allowance decreased by approximately $565,000.

The income tax benefit for the nine months ended June 30, 2020 was $300,786 as compared to an income tax expense of $7,794 for the nine months ended June 30, 2019.

The effective tax benefit rate for the nine months ended June 30, 2020 was 17.4% and differs from the statutory tax rate primarily due to the income tax benefit associated with the NOL carryback provisions under the CARES Act and the release of the valuation allowance. This loss utilization both decreased the deferred tax asset and the valuation allowance. For the nine months ended June 30, 2020, the valuation allowance decreased by approximately $437,000.

The effective tax rate for the nine months ended June 30, 2019 was 0.9% and differs from the statutory tax rate primarily due to net operating loss realization. This loss realization both decreased the deferred tax asset and the valuation allowance. For the nine months ended June 30, 2019, the valuation allowance decreased by approximately $811,000.