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Income Taxes | 12 Months Ended
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Sep. 30, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company's expense from income taxes from continuing operations consists of the following for the periods presented:
| Fiscal Year Ended September 30,
in thousands | 2023 |  | 2022 |  | 2021
Current federal | $ | — |  |  | $ | — |  |  | $ | — |
Current state | 1,896 |  |  | 4,859 |  |  | 1,126 |
Deferred federal | 18,997 |  |  | 47,239 |  |  | 20,331 |
Deferred state | 3,065 |  |  | 1,173 |  |  | 89 |
Total expense from income taxes | $ | 23,958 |  |  | $ | 53,271 |  |  | $ | 21,546 |
The Company's expense from income taxes from continuing operations differs from the amount computed by applying the federal income tax statutory rate as follows for the periods presented:
| Fiscal Year Ended September 30,
in thousands | 2023 |  | 2022 |  | 2021
Income tax computed at statutory rate | $ | 38,356 |  |  | $ | 57,538 |  |  | $ | 30,182 |
State income taxes, net of federal benefit | 2,874 |  |  | 4,482 |  |  | 1,564 |
Deferred rate change | 665 |  |  | 346 |  |  | (904) |
Permanent differences | 2,216 |  |  | 2,952 |  |  | 2,433 |
Tax credits | (20,287) |  |  | (12,081) |  |  | (12,088) |
Other, net | 134 |  |  | 34 |  |  | 359 |
Total expense from income taxes | $ | 23,958 |  |  | $ | 53,271 |  |  | $ | 21,546 |
The principal differences between our effective tax rate and the U.S. federal statutory rate for fiscal years 2023, 2022 and 2021 relate to state taxes, permanent differences and tax credits. Due to the effects of tax credits, our income tax expense is not always directly correlated to the amount of pre-tax income for the associated periods. Deferred income taxes refl ect the net tax effects of temporary differences between the carrying amounts of our assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of significant temporary differences that give rise to the net deferred tax assets are as follows as of September 30, 2023 and 2022:
in thousands | September 30, 2023 |  | September 30, 2022
Deferred tax assets: |  |  |
Federal and state net operating loss and tax credit carryforwards | $ | 138,856 |  |  | $ | 149,299 |
Incentive compensation | 11,422 |  |  | 12,914 |
Warranty and other reserves | 6,918 |  |  | 7,091 |
Inventory adjustments | 3,942 |  |  | 6,716 |
Intangible assets | — |  |  | 1,515 |
Property, equipment and other assets | 1,276 |  |  | 771 |
Uncertain tax positions | 705 |  |  | 705 |
Other | 2,504 |  |  | 2,743 |
Total deferred tax assets | 165,623 |  |  | 181,754 |
Valuation allowance | (30,438) |  |  | (25,396) |
Total deferred tax assets, net of valuation allowance | $ | 135,185 |  |  | $ | 156,358 |
Deferred tax liabilities: |  |  |
Intangible assets | (1,236) |  |  | — |
Total deferred tax liabilities | (1,236) |  |  | — |
Net deferred tax assets | 133,949 |  |  | 156,358 |
As of September 30, 2023, our gross deferred tax assets above included $26.5 million of federal net operating loss (NOL) carryforwards, $78.1 million of federal tax credits, and $37.6 million of state NOL carryforwards. The majority of our federal NOL carryforwards expire in our fis cal 2033, our federal tax credits expire at various dates through our fiscal 2043, and our state NOL carryforwards expire at various dates through our fiscal 2043. As of September 30, 2023, valuation allowance of $30.4 million remains on various state NOL carryforwards for which the Company has concluded that it is more likely than not that these attributes will not be realized. We experienced an “ownership change” as defined in Section 382 of the Internal Revenue Code (Section 382) as of January 12, 2010. Section 382 contains rules that limit the ability of a company that undergoes an “ownership change” to utilize its net operating loss carryforwards, tax credits and certain built-in losses or deductions recognized during the five-year period after the ownership change to offset future taxable income. Because the five-year period has expired, we have determined the actual impact and final classification of those amounts, which are properly reflected in the amounts presented above. There can be no assurance that another ownership change, as defined in the tax law, will not occur. If another “ownership change” occurs, a new annual limitation on the utilization of net operating loss carryforwards, tax credits and built-in losses would be determined as of that date. This limitation, should one be required in the future, is subject to assumptions and estimates that could differ from actual results. Valuation Allowance A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, we assess the need to establish valuation allowances for deferred tax assets periodically based on the more-likely-than-not realization threshold criterion. In our assessment, appropriate consideration is given to all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, the Company's experience with operating loss carryforwards and tax credit carryforwards not expiring unused, the Section 382 limitation on our ability to carryforward pre-ownership change net operating losses, recognized built-in losses or deductions, and tax planning alternatives. Our assessment, while rooted in actual Company performance, are highly subjective and rely on certain estimates, including forecasts, which could differ materially from actual results. In fiscal 2023, our conclusions about our ability to more likely than not realize all of our federal and certain state tax attributes remain consistent with our prior determinations. We considered positive factors including our recent earnings levels, interest savings from our debt reduction strategies, shortage in housing supply, and our backlog. The negative factors included the overall health of the broader economy, significant increases in mortgage interest rates, and weakened housing demand. As of September 30, 2023, the Company will have to cumulatively generate $712.9 million in pre-tax income over the course of its carryforward period to realize its deferred tax assets prior to their expiration, which, as previously discussed, is the Company's fiscal 2043. Unrecognized Tax Benefits A reconciliation of our unrecognized tax benefits is as follows for the beginning and end of each period presented:
| Fiscal Year Ended September 30,
in thousands | 2023 |  | 2022 |  | 2021
Balance at beginning of year | $ | 3,358 |  |  | $ | 3,358 |  |  | $ | 3,441 |
Additions for tax positions related to current year | — |  |  | — |  |  | — |
Additions for tax positions related to prior years | — |  |  | — |  |  | — |
Reductions in tax positions of prior years | — |  |  | — |  |  | — |
Lapse of statute of limitations | — |  |  | — |  |  | (83) |
Balance at end of year | $ | 3,358 |  |  | $ | 3,358 |  |  | $ | 3,358 |
If we were to recognize our $3.4 million gross unrecognized tax benefits remaining as of September 30, 2023, substantially all would impact our effective tax rate. Additionally, we had no accrued interest and penalties as of September 30, 2023, 2022 and 2021. If applicable, we would record interest and penalties related to unrecognized tax benefits in income tax expense within our consolidated statements of operations. In the normal course of business, we are subject to audits by federal and state tax authorities regarding various tax liabilities. The statute of limitations for our major tax jurisdictions remains open for examination for fiscal year 2007 and subsequent years. As of September 30, 2023, we do not expect that any of our uncertain tax positions will reverse within the next twelve months.

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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 -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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