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Income Taxes | 12 Months Ended
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Sep. 30, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Note 15 - Income Taxes The components of income tax (expense) benefit for the years ended September 30, 2024, 2023 and 2022 are as follows:
| Year Ended September 30,
2024 |  | 2023 |  | 2022
Current (expense) benefit: |  |  |  |  |
United States federal | $ | (6,256) |  |  | $ | (97) |  |  | $ | (17) |
State | (2,629) |  |  | (1,032) |  |  | (1,065) |
Total current (expense) benefit | (8,885) |  |  | (1,129) |  |  | (1,082) |
Deferred (expense) benefit: |  |  |  |  |
United States federal | (4,682) |  |  | (4,190) |  |  | 2,380 |
State | (662) |  |  | (446) |  |  | 4,109 |
Total deferred (expense) benefit | (5,344) |  |  | (4,636) |  |  | 6,489 |
Total income tax (expense) benefit | $ | (14,229) |  |  | $ | (5,765) |  |  | $ | 5,407 |
The income tax provision differs from the tax that would result from application of the statutory federal tax rate of 21% to pre-tax income for the years ended September 30, 2024, 2023 and 2022. The reasons for the differences are as follows:
| Year Ended September 30,
2024 |  | 2023 |  | 2022
Income tax expense at statutory rate | $ | (11,808) |  |  | $ | (3,798) |  |  | $ | (4,293) |
State income taxes, net of federal tax benefit | (2,611) |  |  | (1,188) |  |  | (1,356) |
Excess officers compensation | (659) |  |  | (387) |  |  | (276) |
Transaction Costs | — |  |  | (479) |  |  | — |
Adjustment to deferred taxes | (801) |  |  | (322) |  |  | (345) |
R&D Credits Generated | 500 |  |  | 546 |  |  | — |
Decrease in valuation allowance | 808 |  |  | 236 |  |  | 12,075 |
Other, net | 342 |  |  | (373) |  |  | (398) |
Total income tax (expense) benefit | $ | (14,229) |  |  | $ | (5,765) |  |  | $ | 5,407 |
The components of the deferred tax assets (liabilities) recorded in the accompanying consolidated balance sheets were as follows:
|  | September 30,
2024 |  | 2023
Gross deferred tax assets: |  |  |  |
Operating lease liability |  | $ | 42,749 |  |  | $ | 47,349 |
Deferred compensation |  | 596 |  |  | 558 |
Accrued compensation |  | 2,497 |  |  | 2,636 |
Accrued tool sets |  | 1,255 |  |  | 1,069 |
Other reserves and accruals |  | 5,750 |  |  | 4,464 |
Deferred revenue |  | 3,501 |  |  | 4,733 |
Net operating losses |  | 5,044 |  |  | 9,232 |
Tax credit carryforwards |  | 632 |  |  | 929 |
Capitalized R&D costs |  | 3,085 |  |  | 3,109 |
|  | September 30,
2024 |  | 2023
Charitable contribution carryovers |  | 628 |  |  | 1,223 |
Deductions limited by Section 382 |  | — |  |  | 5 |
Other |  | 86 |  |  | 84 |
Valuation allowance |  | (2,012) |  |  | (3,192) |
Total gross deferred tax assets |  | 63,811 |  |  | 72,199 |
Gross deferred tax liabilities: |  |  |  |
Right of use assets for operating leases |  | (40,189) |  |  | (44,726) |
Amortization of goodwill and intangibles |  | (5,513) |  |  | (5,540) |
Depreciation and amortization of property and equipment |  | (17,401) |  |  | (16,829) |
Prepaid and other expenses deductible for tax |  | (1,535) |  |  | (1,241) |
Other comprehensive income |  | (306) |  |  | (758) |
Total gross deferred tax liabilities |  | (64,944) |  |  | (69,094) |
Net deferred tax (liabilities) assets |  | $ | (1,133) |  |  | $ | 3,105 |
The following table summarizes the activity for the valuation allowance for the years ended September 30, 2024, 2023 and 2022:
|  | Year Ended September 30,
|  | 2024 |  | 2023 |  | 2022
Balance at beginning of period |  | $ | 3,192 |  |  | $ | 1,200 |  |  | $ | 13,492 |
Reductions to income tax |  | — |  |  | (236) |  |  | (12,075) |
Write-offs/Adjustments(1) |  | (1,180) |  |  | 2,228 |  |  | (217) |
Balance at end of period |  | $ | 2,012 |  |  | $ | 3,192 |  |  | $ | 1,200 |
(1) The fiscal year 2024 balance primarily relates to finalizing the purchase accounting for the Concorde acquisition. We had a valuation allowance of $2.0 million and $3.2 million against the deferred tax assets as of September 30, 2024 and 2023, respectively, based on our assessment of the ability to utilize the deferred tax assets. The change in valuation allowance during the year is primarily a result of purchase accounting in conjunction with the Concorde acquisition. We continue to maintain a valuation allowance on certain federal and state attributes for which we determined that it was more likely than not that a benefit will not be realized prior to expiration. In assessing whether a valuation allowance was required, we considered the weight of all available positive and negative evidence. As of September 30, 2024, we had approximately $13.5 million and $70.8 million in net operating losses for federal and state tax purposes, respectively. The federal net operating losses can be carried forward indefinitely, while the state net operating losses will expire at various dates through 2044 if not utilized or carried forward indefinitely. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The determination is based on the technical merits of the position and presumes that each uncertain tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information. Although we believe the estimates are reasonable, no assurance can be given that the final outcome of these matters will not be different than what is reflected in the historical income tax provisions and accruals. The following table summarizes the activity related to the gross unrecognized tax benefits for the fiscal years ended September 30, 2024 and 2023:
|  | Year Ended September 30,
|  | 2024 |  | 2023
Balance at beginning of period |  | $ | 496 |  |  | $ | 387 |
Increases relates to current year tax positions |  | 100 |  |  | 109 |
Balance at end of period |  | $ | 596 |  |  | $ | 496 |
The total amount of gross unrecognized tax benefits was $0.6 million as of September 30, 2024, of which $0.5 million, if fully recognized, would decrease our effective tax rate. The current year increase relates to research and development tax credits generated in the current year. We recognize interest and penalties related to unrecognized tax benefits through income tax expense. No interest or penalties were accrued as of September 30, 2024. We do not expect a significant decrease in our liability for unrecognized tax benefits in the next 12 months. 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.

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