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Income Taxes | 12 Months Ended
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Sep. 30, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income tax benefit (expense) for the years ended September 30, 2020, 2019 and 2018 are as follows:
|  | Year Ended September 30,
2020 |  | 2019 |  | 2018
Current benefit (expense): |  |  |  |  |  |
United States federal |  | $ | 11,250 |  |  | $ | 2 |  |  | $ | 125 |
State |  | (303) |  |  | (205) |  |  | 78 |
Total current benefit (expense) |  | 10,947 |  |  | (203) |  |  | 203 |
Deferred benefit (expense): |  |  |  |  |  |
United States federal |  | (345) |  |  | — |  |  | 2,878 |
State |  | — |  |  | — |  |  | (66) |
Total deferred benefit (expense) |  | (345) |  |  | — |  |  | 2,812 |
Total income tax benefit (expense) |  | $ | 10,602 |  |  | $ | (203) |  |  | $ | 3,015 |
The income tax provision differs from the tax that would result from application of the statutory federal tax rate of 21.0% to pre-tax income for the years ended September 30, 2020 and September 30, 2019, and 24.5% to pre-tax income for the year ended September 30, 2018. The reasons for the differences are as follows:
| Year Ended September 30,
2020 |  | 2019 |  | 2018
Income tax benefit at statutory rate | $ | 545 |  |  | $ | 1,610 |  |  | $ | 8,746 |
State income taxes, net of federal tax benefit | (246) |  |  | (165) |  |  | 12 |
Change in federal statutory rate | — |  |  | — |  |  | (12,645) |
Decrease (increase) in valuation allowance | 6,135 |  |  | (1,514) |  |  | 7,066 |
Net operating losses carryback to higher federal statutory rate years | 4,270 |  |  | — |  |  | — |
Other, net | (102) |  |  | (134) |  |  | (164) |
Total income tax benefit (expense) | $ | 10,602 |  |  | $ | (203) |  |  | $ | 3,015 |
The components of the deferred tax assets (liabilities) recorded in the accompanying consolidated balance sheets were as follows:
|  | September 30,
2020 |  | 2019
Gross deferred tax assets: |  |  |  |
Right-of-use assets for operating leases |  | $ | 40,515 |  |  | $ | — |
Deferred compensation |  | $ | 802 |  |  | $ | 1,449 |
Accrued compensation |  | 3,940 |  |  | 2,432 |
Accrued tool sets |  | 831 |  |  | 694 |
Other reserves and accruals |  | 2,665 |  |  | 1,884 |
Deferred revenue |  | 4,406 |  |  | 4,324 |
Deferred rent liability |  | — |  |  | 3,024 |
Financing obligation |  | — |  |  | 10,178 |
Net operating losses |  | 6,729 |  |  | 12,639 |
Tax credit carryforwards |  | 293 |  |  | 205 |
Charitable contribution carryovers |  | 1,527 |  |  | 1,234 |
Deductions limited by Section 382 |  | 764 |  |  | 670 |
Valuation allowance |  | (17,449) |  |  | (25,673) |
Total gross deferred tax assets |  | 45,023 |  |  | 13,060 |
Gross deferred tax liabilities: |  |  |  |
Operating lease liability |  | (37,083) |  |  | — |
Amortization of goodwill and intangibles |  | (2,056) |  |  | (2,056) |
Depreciation and amortization of property and equipment |  | (5,547) |  |  | (10,470) |
Prepaid and other expenses deductible for tax |  | (1,011) |  |  | (863) |
Total gross deferred tax liabilities |  | (45,697) |  |  | (13,389) |
Net deferred tax liabilities |  | $ | (674) |  |  | $ | (329) |
The following table summarizes the activity for the valuation allowance for the years ended September 30 2020, 2019 and 2018:
|  | Year Ended September 30,
|  | 2020 |  | 2019 |  | 2018
Balance at beginning of period |  | $ | 25,673 |  |  | $ | 23,112 |  |  | $ | 38,407 |
Additions (reductions) to income tax |  | (5,947) |  |  | 2,561 |  |  | (5,555) |
Write-offs(1) |  | (2,277) |  |  | — |  |  | (9,740) |
Balance at end of period |  | $ | 17,449 |  |  | $ | 25,673 |  |  | $ | 23,112 |
(1) Of this total, approximately $9.6 million and $2.3 million related to our adoption of ASC 606 as of October 1, 2017 and our adoption of ASC 842 as of October 1, 2019, respectively. We have valuation allowances of $17.4 million and $25.7 million against the deferred tax assets as of September 30, 2020 and September 30, 2019, respectively, based on our assessment of the ability to utilize the deferred tax assets. The valuation allowances established relate to all federal and state deferred tax assets, for which we determined that it was more likely than not that a benefit will not be realized. In assessing whether a valuation allowance was required for the deferred tax assets, we considered all available positive and negative evidence. A significant piece of negative evidence was the cumulative losses incurred in recent years. The CARES Act, which was enacted on March 27, 2020, made tax law changes to provide financial relief to companies as a result of the business impacts of COVID-19. Key income tax provisions of the CARES Act include changes in net operating loss (“NOL”) carryback and carryforwards rules, acceleration of alternative minimum tax credit recovery, increase of the net interest expense deduction limit and charitable contribution limit, and immediate write-off of qualified improvement property. The CARES Act allows us to carryback $20.3 million and $13.0 million of NOLs arising in the years ended September 30, 2019 and September 30, 2018, respectively, generating a tax refund of approximately $11.3 million. During the three months ended March 31, 2020, we recorded a receivable for the expected refund. Approximately $4.2 million was received during the year ended September 30, 2020, leaving approximately $7.1 million in the receivable balance as of September 30, 2020. As of September 30, 2020, we had approximately $18.9 million and $48.4 million in net operating losses for federal and state tax purposes, respectively. Approximately $2.3 million of the federal net operating losses expire in the year 2039 if not utilized, while the rest can be carryforward indefinitely. The state net operating losses expire in the years 2027 through 2040 if not utilized. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. We believe that all of our tax positions meet the more-likely-than not test and therefore no uncertain tax positions were recorded as of September 30, 2020. We file income tax returns for federal purposes and in many states. Our tax filings remain subject to examination by applicable tax authorities for certain length of time, generally three to four years, following the tax year to which these filings relate. In fiscal 2018, 2019 and 2020, we filed returns to carry back federal and certain state net operating losses to prior years. The statute of limitations for adjustment of the net operating losses utilized on these tax returns remains open an additional three to four years, depending on jurisdiction, from the date these returns were filed.

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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/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
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