XML 21 R10.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Note 3 - Income Taxes | 12 Months Ended
--- | ---
Sep. 30, 2016
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
3. | INCOME TAXES
The (benefit from) provision for income taxes consists of the following:
|  | 2016 |  |  | 2015 |  |  | 2014 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (268,000 | ) |  | $ | 458,000 |  |  | $ | 1,065,000 |
State |  |  | (30,000 | ) |  |  | (271,000 | ) |  |  | 484,000 |
|  |  | (298,000 | ) |  |  | 187,000 |  |  |  | 1,549,000 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (1,369,000 | ) |  |  | (1,053,000 | ) |  |  | (1,790,000 | )
State |  |  | (268,000 | ) |  |  | (254,000 | ) |  |  | (249,000 | )
|  |  | (1,637,000 | ) |  |  | (1,307,000 | ) |  |  | (2,039,000 | )
|  | $ | (1,935,000 | ) |  | $ | (1,120,000 | ) |  | $ | (490,000 | )
The difference between the statutory federal income tax rate and the Company’s effective rate is summarized below:
|  | 2016 |  |  | 2015 |  |  | 2014 |
Statutory federal income tax rate |  |  | 34.0 | % |  |  | 34.0 | % |  |  | 34.0 | %
State franchise taxes (net of federal tax benefit) |  |  | 5.2 |  |  |  | (23.3 | ) |  |  | (38.3 | )
State enterprise zone benefits |  |  | --- |  |  |  | 134.9 |  |  |  | --- |
Business meals/gifts |  |  | (2.3 | ) |  |  | (18.8 | ) |  |  | 36.1 |
Domestic production activity deduction |  |  | --- |  |  |  | (2.2 | ) |  |  | (135.7 | )
Dividends received deduction |  |  | 24.5 |  |  |  | 225.7 |  |  |  | (424.6 | )
Penalties for uncertain and unrecognized tax benefits |  |  | --- |  |  |  | --- |  |  |  | 115.5 |
Prior year true-up |  |  | (2.0 | ) |  |  | (7.3 | ) |  |  | 84.7 |
Foreign tax credits |  |  | 4.0 |  |  |  | 28.4 |  |  |  | (17.9 | )
Effect of state rate change on beginning balance of deferred tax liabilities |  |  | 1.4 |  |  |  | (5.0 | ) |  |  | --- |
Others |  |  | 0.2 |  |  |  | (5.5 | ) |  |  | (1.3 | )
Effective tax rate |  |  | 65.0 | % |  |  | 360.9 | % |  |  | (347.5 | )%
At September 30, 2016, the Company’s deferred income tax assets and liabilities were comprised of the following:
|  | 2016 |  |  | 2015 |  |  | 2014 |
Deferred tax assets attributable to: |  |  |  |  |  |  |  |  |  |  |  |
Accrued liabilities, including supplemental compensation and vacation pay accrual |  | $ | 455,000 |  |  | $ | 605,000 |  |  | $ | 1,063,000 |
Impairment losses on investments |  |  | 1,382,000 |  |  |  | 1,369,000 |  |  |  | 1,779,000 |
Bad debt reserves not yet deductible |  |  | 62,000 |  |  |  | 82,000 |  |  |  | 78,000 |
Depreciation and amortization |  |  | 4,549,000 |  |  |  | 3,251,000 |  |  |  | 1,822,000 |
Deferred revenues |  |  | 1,555,000 |  |  |  | 1,378,000 |  |  |  | 1,116,000 |
Credits and other |  |  | 1,519,000 |  |  |  | 869,000 |  |  |  | 12,000 |
Total deferred tax assets |  |  | 9,522,000 |  |  |  | 7,554,000 |  |  |  | 5,870,000 |
Deferred tax liabilities attributable to: |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gains on investments |  |  | (42,250,000 | ) |  |  | (43,278,000 | ) |  |  | (48,896,000 | )
Goodwill |  |  | (1,227,000 | ) |  |  | (896,000 | ) |  |  | (495,000 | )
Total deferred tax liabilities |  |  | (43,477,000 | ) |  |  | (44,174,000 | ) |  |  | (49,391,000 | )
Net deferred income taxes |  | $ | (33,955,000 | ) |  | $ | (36,620,000 | ) |  | $ | (43,521,000 | )
The Company recorded an income tax benefit of $1,935,000 on a pretax loss of $2,978,000 in fiscal 2016. The effective tax rate was lower than the statutory rate primarily due to the dividends received deduction. On pretax loss of $310,000 for fiscal 2015, the Company recorded a tax benefit of $1,120,000, which was lower than the statutory rate mainly resulting from the dividends received deduction, the domestic production activity deduction and a discrete benefit of approximately $400,000 related to the California Enterprise Zone hiring credits which resulted from the Company’s filing amended California tax returns for fiscal 2010 through fiscal 2013. The Company’s effective tax rate was 65% and 361% for fiscal 2016 and 2015, respectively. At September 30, 2016, the Company had an accrued liability of approximately $2,723,000 for uncertain and unrecognized tax benefits relating to an acquisition in fiscal 2013, after a reduction of $521,000 resulting from the recognition of deferred revenues and from the amortization of goodwill for tax purposes. At September 30, 2015, the Company had an accrued liability of approximately $2,991,000 for uncertain and unrecognized tax benefits after a reduction of $253,000. At September 30, 2014, the Company evaluated a tax position taken on its prior year tax return and determined that the position did not meet the more likely than not criteria because that position taken was in contrary to the one accounted for in purchase accounting. The Company thus accrued a liability of approximately $3,244,000 for uncertain and unrecognized tax benefits at September 30, 2014. During fiscal 2016, 2015 and 2014, interest expense of approximately $112,000, $96,000 and $537,000 respectively, was recorded as “interest and penalty expense accrued for uncertain and unrecognized tax benefits” in the consolidated statements of comprehensive income (loss). The Internal Revenue Service is currently conducting an examination of the Company’s fiscal 2014 income tax return. The examination is in the early stages, and the results are unknown at this time. A reconciliation of the beginning and ending balance for liabilities associated with these uncertain and unrecognized tax benefits is as follows:
Uncertain Tax Liability |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Beginning balance |  | $ | 2,991,000 |  |  | $ | 3,244,000 |  |  | $ | --- |
Added liability for the prior year |  |  | --- |  |  |  | --- |  |  |  | 2,393,000 |
Added liability for the current year |  |  | --- |  |  |  | --- |  |  |  | 851,000 |
Tax payment upon settlement |  |  | --- |  |  |  | --- |  |  |  | --- |
Reduced liability for the current year |  |  | (268,000 | ) |  |  | (253,000 | ) |  | --- |
Ending balance |  | $ | 2,723,000 |  |  | $ | 2,991,000 |  |  | $ | 3,244,000 |
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 2013 with regard to federal income taxes and fiscal 2012 for state income taxes.

X
- References No definition available. + 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 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 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 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=65882285&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=65882285&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration