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Income Taxes | 12 Months Ended
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Sep. 30, 2015
Income Taxes [Abstract] |
Income Taxes | 9. INCOME TAXES Federal and state income tax provisions for continuing operations are as follows:
|  |  | Years Ended September 30,
|  |  | 2015 |  | 2014 |  | 2013
Federal: |  |  |  |  |  |  |  |  |
| Current |  | $ | 417 |  | $ | 183 |  | $ | -
| Deferred |  |  | (564) |  |  | 182 |  |  | -
State: |  |  |  |  |  |  |  |  |
| Current |  |  | 729 |  |  | 554 |  |  | 363
| Deferred |  |  | 79 |  |  | (171) |  |  | (37)
|  |  | $ | 661 |  | $ | 748 |  | $ | 326
Actual income tax expense differs from income tax expense computed by applying the U.S. federal statutory corporate rate of 35 percent to income (loss) before income taxes is as follows:
|  |  | Years Ended September 30,
|  |  | 2015 |  | 2014 |  | 2013
Provision (benefit) at the statutory rate |  | $ | 6,139 |  | $ | 2,195 |  | $ | (648)
Increase resulting from: |  |  |  |  |  |  |  |  |
| Alternative minimum tax |  |  | 417 |  |  | - |  |  | -
| Non-deductible expenses |  |  | 753 |  |  | 563 |  |  | 1,269
| Long-lived assets |  |  | 69 |  |  | - |  |  | -
| State income taxes, net of federal deduction |  |  | 937 |  |  | 544 |  |  | 377
| Contingent tax liabilities |  |  | 51 |  |  | - |  |  | -
| Other |  |  | 54 |  |  | - |  |  | 29
Decrease resulting from: |  |  |  |  |  |  |  |  |
| Change in valuation allowance |  |  | (7,034) |  |  | (2,547) |  |  | (651)
| Valuation allowance adjustment - acquisitions |  |  | (725) |  |  | - |  |  | -
| Contingent tax liabilities |  |  | - |  |  | (1) |  |  | (50)
| Other |  |  | - |  |  | (6) |  |  | -
|  |  | $ | 661 |  | $ | 748 |  | $ | 326
Deferred income tax provisions result from temporary differences in the recognition of income and expenses for financial reporting purposes and for income tax purposes. The income tax effects of these temporary differences, representing deferred income tax assets and liabilities, result principally from the following:
|  |  |  | Years Ended September 30,
|  |  |  | 2015 |  | 2014
Deferred income tax assets: |  |  |  |  |  |
| Allowance for doubtful accounts |  | $ | 322 |  | $ | 295
| Accrued expenses |  |  | 9,186 |  |  | 8,171
| Net operating loss carryforward |  |  | 99,610 |  |  | 107,072
| Various reserves |  |  | 1,169 |  |  | 1,363
| Equity losses in affiliate |  |  | 200 |  |  | 200
| Share-based compensation |  |  | 573 |  |  | 419
| Capital loss carryforward |  |  | 222 |  |  | 3,976
| Intangible assets |  |  | 413 |  |  | 1,071
| Other |  |  | 1,744 |  |  | 1,268
Subtotal |  |  | 113,439 |  |  | 123,835
Less valuation allowance |  |  | 111,211 |  |  | 121,878
Total deferred income tax assets |  | $ | 2,228 |  | $ | 1,957
Deferred income tax liabilities: |  |  |  |  |  |
| Property and equipment |  | $ | 599 |  | $ | 608
| Intangible assets |  |  | 1,084 |  |  | 827
| Other |  |  | 343 |  |  | 219
Total deferred income tax liabilities |  |  | 2,026 |  |  | 1,654
Net deferred income tax assets (liabilities) |  | $ | 202 |  | $ | 303
In 2015, the valuation allowance on our deferred tax assets decreased by $10,667. This decrease consisted of $7,034 through the income statement, expiration of capital losses of $3,641, and acquisition purchase accounting of $725, offset by other increases of $733. In 2002, we adopted a tax accounting method change that allowed us to deduct goodwill for income tax purposes that had previously been classified as non-deductible. The accounting method change resulted in additi onal amortizable tax basis in goodwill. We believe the realization of the additional tax basis in goodwill is not more likely than not and have not recorded a deferred tax asset. Although a deferred tax asset has not been recorded through September 30, 2015, we have derived a cumulative cash tax reduction of $11,4 87 from the change in tax accounting method and the subsequent amortization of the additional tax goodwill. In addition, the amortization of the additional tax goodwill has resulted in additional fede ral net operating loss carry forwards of $142,052 and state net operating loss carry forwards of $1 2,320. We believe the realization of the additional net operating loss carry forwards is not more likely than not and have not recorded a deferred tax asset. We have zero tax basis in additional tax goodwill that will be amortized during the year ended September 30, 2016. As of September 30, 2015, we had available approximately $4 39,029 of federal net t ax operating loss carry forward for federal income tax purposes, including $142,052 resulting from the additional amortization of tax goodwill. This carry forward, which may provide future tax benefits, will begin to expire in 20 22. On May 12, 2006, we had a change in ownership as defin ed in Internal Revenue Code Section 382. As such, our utilization after the change date of our net operating loss in existence as of the change of control date was subject to Section 382 limitations for federal income taxes and some state income taxes. The annual limitation under Section 382 on the utilization of f ederal net operating losses was approximately $20,000 for the first five tax years subsequent to the change in ownership and $16,000 thereafter. Approximately $295,318 of federal net operating los ses will not be subject to this limitation. Also, after applying the Section 382 limitation to available state net operating loss carry forwards, we had available approximately $1 01,515 state net tax operating loss carry forwards, including $1 2,320 resulti ng from the additional amortization of tax goodwill which begin s to expire as of September 30, 2016. We have provided valuation allowances on all net operating losses where it is determined it is more likely than not that they will expir e without being utilized. In assessing the realizability of deferred tax assets at September 30, 2015, we considered whether it was more likely than not that some portion or all of the deferred tax assets will not be realized. Our realization of deferred ta x assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. Over the ten-year period from 2004 through 2013, the Company reported net losses each year, finally returning to p rofitability in the year ended September 30, 2014. Although we have recently returned to profitability, GAAP guidelines place considerably more weight on historical results and less weight on future projections and as such the cumulative pretax losses prov ide sufficient negative evidence to support the appropriateness of a full valuation allowance. W e have provided valuation allowances of $106,530 for all federal deferred tax assets and $4,6 81 for certain state deferred tax assets. We believe that $777 and $135 of federal and state deferred tax assets, respectively, will be realized by offsetting reversing deferred tax liabilities. In addition, we have $89 9 of net state deferred tax assets that we expect will be realized, and therefore valuation allowances w ere not provided for these assets. We also have certain deferred tax liabilities that may not be offset by deferred tax assets, and for which we have recorded a deferred tax liability of $697. As a result, we have recorded a net deferred tax asset of $20 2 on our consolidated balance sheets. We will evaluate the appropriateness of our remaining deferred tax assets and valuation allowances on a quarterly basis. As a result of the reorganization and related adjustment to the book basis in goodwill, we hav e tax basis in excess of book basis in amortizable goodwill of approximately $2 4,1 90. The tax basis in amortizable goodwill in excess of book basis is not reflected as a deferred tax asset. To the extent the amortization of the excess tax basis results in a cash tax benefit, the benefit will first go to reduce goodwill, then other long-term intangible assets, and then tax expense. GAAP requires financial statement reporting of the expected future tax consequences of uncertain tax return reporting position s on the presumption that all relevant tax authorities possess full knowledge of those tax reporting positions, as well as all of the pertinent facts and circumstances, but it prohibits discounting of any of the related tax effects for the time value of mo ney. The evaluation of a tax position is a two-step process. The first step is the recognition process to determine if it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authority, based on the tech nical merits of the position. The second step is a measurement process whereby a tax position that meets the more likely than not recognition threshold is calculated to determine the amount of benefit/expense to recognize in the financial statements. The t ax position is measured at the largest amount of benefit/expense that is more likely than not of being realized upon ultimate settlement. A reconciliation of the beginning and ending balances of unrecognized tax benefit is as follows:
| Years Ended September 30,
| 2015 |  | 2014 |
Balance at October 1, | $ | 56,079 |  | $ | 55,612 |
Additions for position related to current year |  | 98 |  |  | 468 |
Additions for positions of prior years |  | 1 |  |  | 2 |
Reduction resulting from the lapse of the applicable statutes of limitations |  | 198 |  |  | 3 |
Reduction resulting from settlement of positions of prior years |  | 17 |  |  | - |
Balance at September 30, | $ | 55,963 |  | $ | 56,079 |
As of September 30, 2015 and 2014, $5 5,963 and $5 6,079, respectively, of unrecognized tax benefit s would result in a decrease in the provision for income tax expense, of which $50,581 and $5 0,759 for each of those years, respectively, relates to net operating loss from additional goodwill resulting from the tax accounting method change discussed above. We believe the realization of the net operating losses resulting from the tax accounting method change is not mor e likely than not and have not recorded a deferred tax asset. However, if we are partially or fully successful in defending our tax accounting method change we may realize a portion or all of the deferred tax asset related to this net operating loss, offs et by an increase in the valuation allowance. We anticipate that approximately $6 of unrecognized tax benefits, including accrued interest, may reverse in the next twelve months. The reversal is predominately due to the expiration of the statutes of limita tio n for unrecognized tax benefits. We had approximately $18 and $6 accrued for the payment of interest and penalties at September 30, 2015 and 2014, res pectively. We recognize interest and penalties related to unrecognized tax benefits as par t of the provision for income taxes. We are currently not under federal audit by the Internal Revenue Service. The tax years ended September 30, 2012 and forward are subject to federal audit as are tax years prior to September 30, 2012, to the extent of unutilized net operating losses generated in those years. The tax years ended September 30, 2011 and forward are subject to state audits as are tax years prior to September 30, 2011, to the extent of unutilized net operating losses generated in those years. The net deferred income tax assets and liabilities are comprised of the following:
|  |  |  | Years Ended September 30,
|  |  |  | 2015 |  | 2014
| Current deferred income taxes: |  |  |  |  |  |
|  | Assets |  | $ | 229 |  | $ | 201
|  | Liabilities |  |  | 174 |  |  | 196
| Net deferred tax asset, current |  | $ | 55 |  | $ | 5
| Noncurrent deferred income taxes: |  |  |  |  |  |
|  | Assets |  | $ | 1,999 |  | $ | 1,961
|  | Liabilities |  |  | 1,852 |  |  | 1,663
| Net deferred tax asset (liability), non-current |  |  | 147 |  |  | 298
Net deferred income tax assets (liabilities) |  | $ | 202 |  | $ | 303

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 + Details
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