XML 31 R16.htm IDEA: XBRL DOCUMENT
v3.20.4

10. INCOME TAXES | 12 Months Ended
--- | ---
Sep. 30, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 10 INCOME TAXES The following table summarizes the Company’s consolidated provision/(benefit) for U.S. federal, state and foreign taxes on income:
|  | Fiscal 2020 |  |  | Fiscal 2019 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | (4,000 | ) |  | $ | (4,000 | )
State |  |  | 13,000 |  |  |  | – |
Foreign |  |  | – |  |  |  | – |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 414,000 |  |  |  | (713,000 | )
State |  |  | 82,000 |  |  |  | (127,000 | )
Foreign |  |  | 283,000 |  |  |  | (46,000 | )
|  |  | 788,000 |  |  |  | (890,000 | )
Change in valuation allowance |  |  | (779,000 | ) |  |  | 886,000 |
Income tax provision/(benefit) |  | $ | 9,000 |  |  | $ | (4,000 | )
The deferred tax provision/(benefit) is the change in the deferred tax assets and liabilities representing the tax consequences of changes in the amounts of temporary differences, net operating loss carryforwards and changes in tax rates during the fiscal year. The Company’s deferred tax assets and liabilities are comprised of the following:
|  | September 30, |
|  | 2020 |  |  | 2019 |
Deferred tax assets |  |  |  |  |  |  |  |
Net operating losses |  | $ | 1,812,000 |  |  | $ | 2,311,000 |
Capital loss carryforwards |  |  | – |  |  |  | 38,000 |
Share-based compensation |  |  | 180,000 |  |  |  | 169,000 |
Alternative minimum and other tax credits |  |  | 5,000 |  |  |  | 9,000 |
Excess tax over book basis in inventory |  |  | 20,000 |  |  |  | 32,000 |
Reserves and other allowances |  |  | 155,000 |  |  |  | 535,000 |
Deferred rent |  |  | 13,000 |  |  |  | 19,000 |
Accrued compensation |  |  | 70,000 |  |  |  | 9,000 |
Accrued expenses |  |  | – |  |  |  | 151,000 |
Depreciation |  |  | 31,000 |  |  |  | 27,000 |
Charitable contributions |  |  | 3,000 |  |  |  | 1,000 |
Total deferred tax assets |  |  | 2,289,000 |  |  |  | 3,301,000 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Prepaid expenses |  |  | (58,000 | ) |  |  | (141,000 | )
Intangible assets |  |  | (245,000 | ) |  |  | (298,000 | )
481 Election (IPS) |  |  | (99,000 | ) |  |  | (196,000 | )
Total deferred tax liabilities |  |  | (402,000 | ) |  |  | (635,000 | )
Valuation allowance |  |  | (1,887,000 | ) |  |  | (2,666,000 | )
Net deferred tax assets |  | $ | – |  |  | $ | – |
For Fiscal 2020 and Fiscal 2019, the Company recorded a provision for income taxes which includes net expense of $9,000 in Fiscal 2020, and a benefit of $4,000 in Fiscal 2019. The Fiscal 2020 net expense of $9,000 includes state income tax expenses of $13,000, partially offset by a $4,000 refund of the remaining unused balance of alternative minimum tax (“AMT”) credits. The $4,000 tax benefit recorded in Fiscal 2019 related to a partial refund of AMT tax. Under the Tax Cuts and Jobs Act of 2017, AMT was repealed. The tax code in turn provided for a refund of the tax credits that existed on December 31, 2017 at a 50% rate in tax years 2018, 2019 and 2020, with any remaining credits being fully refundable in 2021. The CARES Act now allows corporations to immediately claim unused AMT credits on their current year tax return. State income tax expense is the result of taxable income in states where net operating loss carryforwards (“NOLs”) are not available. At September 30, 2020, the Company had available net NOLs for U.S. federal income tax purposes of $7,020,000. NOLs generated prior to 2018 expire beginning in 2031 while NOLs generated after 2018 have an indefinite carryforward period. The NOLs result in a deferred tax asset with respect to U.S. federal income taxes of $1,700,000. In addition, at September 30, 2020, the Company had available NOLs for foreign income tax purposes of $610,000, resulting in a deferred tax asset of $114,000, expiring through 2024. The Company has capital loss carryovers of $160,000, which expired in Fiscal 2020, as no capital gain has been recognized to utilize this deferred tax asset. Total net deferred tax assets, before valuation allowance, were $1,887,000 and $2,666,000 at September 30, 2020 and 2019, respectively. Undistributed earnings of the Company's foreign subsidiaries are considered permanently reinvested; therefore, in accordance with U.S. GAAP, no provision for U.S. federal and state income taxes would result. In Fiscal 2020, Forward Switzerland and Forward U.K. had net income for tax purposes of $116,000 and $13,000, respectively. At September 30, 2020, as part of its periodic evaluation of the necessity to maintain a valuation allowance against its deferred tax assets, and after consideration of all factors, including, among others, projections of future taxable income, current year NOL utilization and the extent of the Company's cumulative losses in recent years, the Company determined that, on a more likely than not basis, it would not be able to use remaining deferred tax assets, except with respect to the U.S. federal income taxes in the event the Company elects to effect repatriation of certain foreign source income of Forward Switzerland, which income is currently considered to be permanently reinvested and for which no U.S. tax liability has been accrued. Accordingly, the Company has determined to maintain a full valuation allowance against its net deferred tax assets. At September 30, 2020 and 2019, the valuation allowance was $1,887,000 and $2,666,000, respectively. In the future, the utilization of the Company's NOLs may be subject to certain change of control limitations. If the Company determines that it will be able to use some or all of its deferred tax assets in a future reporting period, the adjustment to reduce or eliminate the valuation allowance would reduce its income tax expense and increase after-tax income. The significant elements contributing to the difference between the U.S. federal statutory tax rate and the Company’s effective tax rate are as follows:
|  | Fiscal 2020 |  |  | Fiscal 2019 |
U.S. federal statutory rate |  |  | 21.0% |  |  |  | 21.0% |
State tax rate, net of federal benefit |  |  | (1.9% | ) |  |  | 2.8% |
Foreign rate differential |  |  | (14.9% | ) |  |  | 1.4% |
Other |  |  | (10.6% | ) |  |  | 1.9% |
Change in tax credits |  |  | (0.2% | ) |  |  | (0.1% | )
Effect of state tax rate change |  |  | 1.5% |  |  |  | – |
Capital loss - expiration |  |  | (2.1% | ) |  |  | – |
Change in valuation allowance |  |  | 41.1% |  |  |  | (26.6% | )
State income taxes |  |  | (0.7% | ) |  |  | – |
Federal AMT |  |  | 0.2% |  |  |  | 0.1% |
Permanent differences |  |  | (33.9% | ) |  |  | (0.4% | )
Effective tax rate |  |  | (0.5% | ) |  |  | 0.1% |
In November 2020, the IRS issued Revenue Ruling 2020-27, providing its position regarding the deductibility for federal income tax purposes of otherwise deductible expenses incurred when a taxpayer receives a PPP loan. This ruling states the taxpayer may not deduct those expenses in the taxable year in which the expenses were paid or incurred if the taxpayer reasonably expects to receive forgiveness of the covered loan. In accordance with this ruling, the Company has excluded these qualifying expenses from taxable income and recorded this difference as a permanent item. At September 30, 2020 and 2019, the Company has not accrued any interest or penalties related to uncertain tax positions. It is the Company's policy to recognize interest and/or penalties, if any, related to income tax matters in income tax expense in the consolidated statements of operations. For the periods presented in the accompanying consolidated statements of operations, no material income tax related interest or penalties were assessed or recorded. All fiscal years prior to the fiscal year ended September 30, 2017 are closed to federal and state examination.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration