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Income Taxes | 6 Months Ended
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Mar. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The calculation of the effective tax rate is as follows (in thousands):
| Three months ended March 31, |  | Six months ended March 31,
| 2020 |  | 2019 |  | 2020 |  | 2019
Income (loss) before income taxes | $ | 9,555 |  |  | $ | 1,363 |  |  | $ | 12,888 |  |  | $ | (1,571 | )
Income tax provision | 2,134 |  |  | 405 |  |  | 2,692 |  |  | 166 |
Net income (loss) | $ | 7,421 |  |  | $ | 958 |  |  | $ | 10,196 |  |  | $ | (1,737 | )
Effective tax rate | 22 | % |  | 30 | % |  | 21 | % |  | (11 | )%
Our income tax provision reflects an effective tax rate on pre-tax income of 22% for the second quarter of Fiscal 2020 compared to 30% in the second quarter of Fiscal 2019. The effective tax rate for the quarter ended March 31, 2020 approximated the U.S. federal statutory rate as the tax benefits related to the Research and Development Tax Credit (R&D Tax Credit) and the projected utilization of net operating loss carryforwards in Canada that were fully reserved with a valuation allowance were partially offset by a discrete item recorded in the second quarter of Fiscal 2020 in the amount of $0.5 million. This discrete item was related to the establishment of a valuation allowance against the deferred tax assets in the United Kingdom (UK) as discussed below. For the second quarter of Fiscal 2019, the effective tax rate was negatively impacted by Canadian tax losses that were reserved with a valuation allowance. The effective tax rate of 21% for the six months ended March 31, 2020 was favorably impacted by the R&D Tax Credit as well as the projected utilization of net operating loss carryforwards in Canada that were fully reserved with a valuation allowance. Conversely, we recorded a valuation allowance against our UK deferred tax assets as a discrete item during the second quarter of Fiscal 2020 that negatively impacted the effective tax rate for the six months ended March 31, 2020. For the six months ended March 31, 2019, the effective tax rate of negative 11% was adversely impacted by the losses recognized in Canada reserved with a valuation allowance. There were no material discrete items recognized in the first six months of Fiscal 2019. During our assessment of deferred income taxes, in the second quarter of Fiscal 2020, we recorded a valuation allowance of $0.5 million against our UK net deferred tax assets. In assessing the realizability of net deferred tax assets, we determined it was more-likely-than-not that the net deferred tax assets may not be realized based upon recent UK tax losses and anticipated results in the near term. Estimates may change as new events occur, estimates of future taxable income are reduced or increased, additional information becomes available, or operating environments change, which may result in a full or partial reversal of the valuation allowance. Due to the expiration of certain federal statutes of limitations and voluntary filings, management believes that, within the next twelve months, it is reasonably possible that the unrecognized tax benefits will decrease by approximately $0.7 million and would positively impact our effective tax rate. We are unable to make reasonably reliable estimates regarding the timing of future cash outflows, if any, associated with the remaining unrecognized tax benefits.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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