Income Taxes

3 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

3. Income Taxes

The Company will continue to assess all available evidence during future periods to evaluate any changes to the realization of its deferred tax assets. If the Company were to determine that it would be able to realize additional state deferred tax assets in the future, it would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The income tax expense for the three-month period ended December 31, 2021 was $307,490 as compared to an income tax expense of $9,497 for the three-month period ended December 31, 2020.

The effective tax rate for the three-month period ended December 31, 2021 was 21.3% and differs from the statutory tax rate primarily due to permanent items and state taxes.

The effective tax rate for the three-month period ended December 31, 2020 was 3.8% and differs from the statutory tax rate primarily due to net operating loss realization 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-month period ended December 31, 2020, the valuation allowance decreased by approximately $40,000.