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Note 3 - Income Taxes
 12 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

3. INCOME TAXES

 

The provision (benefit) (000) from income taxes consists of the following:

 

   

2024

    

2023

  

Current:

                

Federal

   $ 3,000     $ 1,275  

State

     1,053       49  

Foreign

     70       0  
      4,123       1,324  

Deferred:

                

Federal

     17,005       3,940  

State

     5,037       1,386  

Foreign

     0       0  
      22,042       5,326  
    $ 26,165     $ 6,650  

 

The difference between the statutory federal income tax rate and the Company’s effective rate is summarized below:

 

   

2024

    

2023

  
                 

Statutory federal income tax rate

     21.0 %     21.0 %

State franchise taxes (net of federal tax benefit)

     5.0       5.0  

Effect of state rate change on beginning balance of deferred tax liabilities

     (0.4 )     (1.0 )

Dividends received deduction

     (0.5 )     (1.6 )

Others

     (0.0 )     0.3  

Effective tax rate

     25.1 %     23.7 %

 

The Company’s deferred income tax assets and liabilities (000) were comprised of the following:

 

   

2024

    

2023

  

Deferred tax assets attributable to:

                

Accrued liabilities, including supplemental compensation and vacation pay accrual

   $ 1,903     $ 1,990  

Impairment losses on marketable securities

     (280 )     (306 )

Bad debt reserves not yet deductible

     55       55  

Depreciation and amortization

     1,730       2,206  

Deferred revenues

     517       1,068  

Goodwill

     265       370  

Net operating losses

     166       281  

Credits and other

     103       (3 )

Total deferred tax assets

     4,459       5,661  
                 

Deferred tax liabilities attributable to:

                

Unrealized gains on marketable securities

     (57,100 )     (36,260 )

Net deferred income taxes

   $ (52,641 )   $ (30,599 )

 

During fiscal 2024, the Company recorded an income tax provision of $26,165,000 on pretax income of $104,278,000. The income tax provision consisted of tax expenses of $24,534,000 on the realized and unrealized gains on marketable securities, and $2,175,000 on operating income, partially offset by a tax benefit of $544,000 for the dividends received deduction and other permanent differences.  Consequently, the overall effective tax rate for fiscal 2024 was 25.1%, after including the taxes on the realized and unrealized gains on marketable securities.

 

 During fiscal 2023, the Company recorded an income tax provision of $6,650,000 on pretax income of $28,102,000. The income tax provision consisted of tax provisions of $4,250,000 on the realized and unrealized gains on marketable securities, and $2,803,000 on operating income, partially offset by a tax benefit of $403,000 for the dividends received deduction and other permanent differences.  Consequently, the overall effective tax rate for fiscal 2023 was 23.7%, after including the taxes on the realized and unrealized gains on marketable securities.

 

The Company files consolidated federal income tax returns, with its domestic subsidiary, in the United States and with various state jurisdictions and is no longer subject to examinations for fiscal years before fiscal 2020 with regard to federal income taxes and fiscal 2019 for state income taxes.  The Canadian subsidiary files a federal and provincial tax return in Canada.

 

During fiscal 2021, the Company utilized all of its federal and certain state net operating losses (NOL). California suspended the use of NOLs for fiscal years beginning in 2020 and 2021. During fiscal 2022, the Company utilized $4.2 million of $5.5 million California NOLs and used the remaining $1.3 million of California NOLs in fiscal 2024. The Company also has NOLs in other states, expiring as follows:

 

Fiscal Year ended (in million)

  

California NOLs

    

Other State NOLs

  
                 

September 30, 2029 through September 30, 2036

   $ ---     $ .1  

September 30, 2037

     ---       .1  

September 30, 2038

     ---       .2  

September 30, 2039

     ---       .1  

No expiration

     ---       2.1  

Total

   $ ---     $ 2.7