Note 4 - Income Taxes

12 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Text Block]

Note 4 – Income Taxes

The provision (benefit) for income taxes for the years ended September 30, 2012, 2011 and 2010 consists of:

	2012		2011		2010
Current	$	532,000	$	1,159,000	$	2,569,000
Deferred		234,000		533,000		(3,000	)
	$	766,000	$	1,692,000	$	2,566,000

The following table summarizes the differences between the U.S. federal statutory rate and the Company’s effective tax rate for financial statement purposes for the years ended September 30, 2012, 2011 and 2010:

	2012			2011			2010
Statutory tax rate		34.0	%		34.0	%		34.0	%
State income taxes, net of U.S. federal tax benefit		3.5	%		4.6	%		4.0	%
Charges without tax benefit		1.4	%		0.7	%		0.5	%
Tax credits and other exclusions		(0.9	%)		0.7	%		(0.5	%)
Company’s effective tax rate		38.0	%		40.0	%		38.0	%

The tax effects of temporary differences related to deferred taxes at September 30, 2012 and 2011 consist of the following:

	2012		2011
Deferred tax assets:
Net operating loss carryforwards	$	500,000	$	624,000
Accounts receivable		115,000		116,000
Inventory		639,000		755,000
Interest rate swap		–		370,000
Other, net		196,000		192,000
		1,450,000		2,057,000
Deferred tax liabilities:
Financial basis in excess of tax basis of certain assets		592,000		595,000
Net deferred tax asset	$	858,000	$	1,462,000

The above net deferred tax asset is presented in the Company’s Consolidated Balance Sheets at September 30, 2012 and 2011 as follows:

	2012			2011
Deferred tax asset – current	$	920,000		$	1,059,000
Deferred tax asset (liability) – noncurrent		(62,000	)		403,000
	$	858,000		$	1,462,000

Utilization of the Company’s net operating loss carryforward, totaling approximately $1.4 million at September 30, 2012, to reduce future taxable income is limited to an annual deductable amount of approximately $0.3 million.  The net operating loss carryforward expires in varying amounts in 2019 and 2020.

In accordance with FASB ASC 740, Income Taxes, the Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized.  In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance.  The Company has concluded, based on its historical earnings and projected future earnings, that it will be able to realize the full effect of the deferred tax assets and no valuation allowance is needed.

Based upon a review of its income tax positions, the Company believes that its positions would be sustained upon an examination by the Internal Revenue Service and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded. Generally, the Company is no longer subject to examinations by the U.S. federal, state or local tax authorities for tax years before 2009.