XML 54 R10.htm IDEA: XBRL DOCUMENT
v2.4.1.9

Note 3 - Income Taxes | 12 Months Ended
--- | ---
Sep. 30, 2014
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
3. | INCOME TAXES
The (benefit from) provision for income taxes consists of the following:
|  | 2014 |  |  | 2013 |  |  | 2012 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 1,065,000 |  |  | $ | 1,011,000 |  |  | $ | 1,840,000 |
State |  |  | 484,000 |  |  |  | (228,000 | ) |  |  | 781,000 |
|  |  | 1,549,000 |  |  |  | 783,000 |  |  |  | 2,621,000 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (1,790,000 | ) |  |  | (30,000 | ) |  |  | (223,000 | )
State |  |  | (249,000 | ) |  |  | 37,000 |  |  |  | (38,000 | )
|  |  | (2,039,000 | ) |  |  | 7,000 |  |  |  | (261,000 | )
|  | $ | (490,000 | ) |  | $ | 790,000 |  |  | $ | 2,360,000 |
The difference between the statutory federal income tax rate and the Company’s effective rate is summarized below:
|  | 2014 |  |  | 2013 |  |  | 2012 |
Statutory federal income tax rate |  |  | 34.0 | % |  |  | 34.0 | % |  |  | 34.0 | %
State franchise taxes (net of federal tax benefit) |  |  | (38.3 | ) |  |  | 5.0 |  |  |  | 5.8 |
Business meals/gifts |  |  | 36.1 |  |  |  | 1.0 |  |  |  | 0.2 |
Domestic production activity deduction |  |  | (135.7 | ) |  |  | (2.0 | ) |  |  | (2.6 | )
Dividends received deduction |  |  | (424.6 | ) |  |  | (10.2 | ) |  |  | (4.2 | )
Penalties for uncertain and unrecognized tax benefits |  |  | 115.5 |  |  |  | --- |  |  |  | --- |
Reversal of uncertain tax position |  |  | --- |  |  |  | --- |  |  |  | (3.6 | )
Prior year true-up |  |  | 84.70 |  |  |  | --- |  |  |  | --- |
Foreign tax credits |  |  | (17.9 | ) |  |  | (0.3 | ) |  |  | (0.3 | )
Effect of state rate change on beginning balance of deferred tax liabilities |  |  | --- |  |  |  | (2.4 | ) |  |  | --- |
Other |  |  | (1.3 | ) |  |  | (7.8 | ) |  |  | 0.5 |
Effective tax rate |  |  | (347.5 | %) |  |  | 17.3 | % |  |  | 29.8 | %
At September 30, 2014, the Company’s deferred income tax assets and liabilities were comprised of the following:
|  | 2014 |  |  | 2013 |  |  | 2012 |
Deferred tax assets attributable to: |  |  |  |  |  |  |  |  |  |  |  |
Accrued liabilities, including supplemental compensation and vacation pay accrual |  | $ | 1,063,000 |  |  | $ | 1,083,000 |  |  | $ | 1,817,000 |
Impairment losses on investments |  |  | 1,779,000 |  |  |  | 1,778,000 |  |  |  | 1,135,000 |
Bad debt reserves not yet deductible |  |  | 78,000 |  |  |  | 78,000 |  |  |  | 80,000 |
Depreciation and amortization |  |  | 1,822,000 |  |  |  | 356,000 |  |  |  | 49,000 |
Deferred revenues |  |  | 1,116,000 |  |  |  | --- |  |  |  | --- |
Other |  |  | 12,000 |  |  |  | 41,000 |  |  |  | 262,000 |
Total deferred tax assets |  |  | 5,870,000 |  |  |  | 3,336,000 |  |  |  | 3,343,000 |
Deferred tax liabilities attributable to: |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gains on investments |  |  | (48,896,000 | ) |  |  | (34,610,000 | ) |  |  | (20,898,000 | )
Goodwill |  |  | (495,000 | ) |  |  | --- |  |  |  | --- |
Total deferred tax liabilities |  |  | (49,391,000 | ) |  |  | (34,610,000 | ) |  |  | (20,898,000 | )
Net deferred income taxes |  | $ | (43,521,000 | ) |  | $ | (31,274,000 | ) |  | $ | (17,555,000 | )
The Company recorded an income tax benefit of $490,000 on pretax income of $141,000 in fiscal 2014. The income tax benefit was higher than the amount computed using the statutory rate because of the dividends received deduction and the domestic production activity deduction. On pretax income of $4,569,000 for fiscal 2013, the Company recorded a tax provision of $790,000 which was lower than the amount computed using the statutory rate primarily because of the available dividends received deduction and the domestic production activity deduction. The Company’s effective tax rate was -348% and 17% for fiscal 2014 and 2013, respectively. 45 The Company evaluated a tax position taken on its prior year tax return and determined that the position does not meet the more likely than not criteria. At September 30, 2014, the Company accrued a liability of approximately $3,244,000 for uncertain and unrecognized tax benefits relating to an acquisition in fiscal 2013. If recognized, it is not expected these unrecognized tax benefits would not have a significant impact to the Company’s effective tax rate. The prior year’s income tax return which was filed in July 2014 reflected an income tax position contrary to the one accounted for in purchase accounting in December 2012. Interest and penalties of approximately $537,000 were recorded as “interest and penalty expense accrued for uncertain and unrecognized tax benefits” in the statement of comprehensive income. The Company does not anticipate a significant increase or decrease in this liability in the next twelve months. A reconciliation of the beginning and ending balance for liabilities associated with these uncertain and unrecognized tax benefits is as follows:
Uncertain Tax Liability |  |
|  | 2014 |  |  | 2013 |  |  | 2012 |  |
Beginning balance |  | $ | --- |  |  | $ | --- |  |  | $ | 700,000 |  |
Added liability for the prior year |  |  | 2,393,000 |  |  |  | --- |  |  |  | --- |  |
Added liability for the current year |  |  | 851,000 |  |  |  | --- |  |  |  | --- |  |
Tax payment upon settlement |  |  | --- |  |  |  | --- |  |  |  | (418,000 | ) |
Reduction adjustment |  | --- |  |  | --- |  |  |  | (282,000 | ) |
Ending balance |  | $ | 3,244,000 |  |  | $ | --- |  |  | $ | --- |  |
At September 30, 2013 and 2012, there were no unrecognized tax benefits for the uncertain tax positions as the Company settled the previously claimed research and development credits in its tax returns for the fiscal 2002 to 2007 with the Internal Revenue Service in March 2012. The Company files federal income tax returns in the United States and with various state jurisdictions and is no longer subject to examinations for fiscal years before fiscal 2011 with regards to federal income taxes and fiscal 2010 for state income taxes. The subject acquisition was structured as a stock acquisition with an Internal Revenue Code Section 338(h)(10) election, which results in the acquisition being treated as an acquisition of assets for income tax purposes. The other acquisition was structured as an asset purchase. As such, the amounts allocated to customer relationships and purchased developed technology as well as goodwill are amortized over a 15-year period on a straight-line basis for tax purposes. Differences in the amortization period and methods between book and tax useful lives will result in deferred tax assets or liabilities.

X
- Details
Name: | us-gaap_DisclosureTextBlockAbstract
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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration