8. INCOME TAXES:

The components of our benefit from income taxes consisted of the following for the fiscal years ended September 30,


	2011			2012			2013
	(Amounts in thousands)
Current benefit:
Federal	$	(235	)	$	(116	)	$	101
State		(132	)		(60	)		(995	)

Total current benefit		(367	)	$	(176	)	$	(894	)

Deferred benefit:
Federal		—			—			—
State		—			—			—

Total deferred benefit		—			—			—

Total income tax benefit	$	(367	)	$	(176	)	$	(894	)

Below is a reconciliation of the statutory federal income tax rate to our effective tax rate for the fiscal years ended September 30,


	2011			2012			2013
Federal tax (benefit) provision		(35.0	)%		35.0	%		35.0	%
State taxes, net of federal effect		(6.8	)%		(16.8	)%		(0.7	)%
Stock based compensation		0.7	%		7.5	%		0.6	%
Valuation allowance		39.5	%		(50.2	)%		(45.0	)%
Federal NOL carryback		(2.0	)%		(12.6	)%		0.0	%
Foreign rate differential		0.0	%		15.4	%		2.9	%
Other		0.5	%		2.7	%		0.9	%

Effective tax rate		(3.1	)%		(19.0	)%		(6.3	)%

Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. The tax effects of these temporary differences representing the components of deferred tax assets (liabilities) at September 30,


	2012			2013
	(Amounts in thousands)
Current deferred tax assets:
Inventories	$	1,644		$	1,494
Accrued expenses		651			1,269

Current deferred tax assets		2,295			2,763
Valuation allowance		(2,295	)		(2,763	)

Net current deferred tax assets	$	—		$	—

Long-term deferred tax assets:
Depreciation and amortization	$	11,945		$	8,275
Stock based compensation		4,177			4,216
FIN 48 deferred tax asset		482			70
Tax loss carryforwards		29,196			26,726
Other		182			294

Long-term deferred tax assets		45,982			39,581
Valuation allowance		(45,982	)		(39,581	)

Net long-term deferred tax assets	$	—		$	—

Pursuant to ASC 740, we must consider all positive and negative evidence regarding the realization of deferred tax assets, including past operating results and future sources of taxable income. Under the provisions of ASC 740, we determined that a full valuation allowance was needed given cumulative losses in recent years excluding the Deepwater Horizon recoveries. The total valuation allowance at September 30, 2012 and 2013 was $48.3 million and $42.3 million, respectively.

Under ASC 740, the impact of an uncertain tax position taken or expected to be taken on an income tax return must be recognized in the financial statements at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained. As of September 30, 2012 and 2013, we had approximately $1.5 million and $224,000, respectively, of gross unrecognized tax benefits, of which approximately $1.0 million and $154,000, respectively, if recognized, would impact the effective tax rate before considering a change in valuation allowance.

The reconciliation of the total amount recorded for unrecognized tax benefits at the beginning and end of the fiscal years ended September 30, 2012 and 2013 is as follows:


	2012			2013
	(Amounts in thousands)
Unrecognized tax benefits at the beginning of the year	$	1,581		$	1,498
Increases in tax positions for prior years		46			34
Decreases in tax positions for prior years		(32	)		(1,308	)
Lapse of statute of limitations		(97	)		0

Unrecognized tax benefits at September 30,	$	1,498		$	224

Consistent with our prior practices, we recognize interest and penalties related to uncertain tax positions as a component of income tax expense. As of September 30, 2012 and 2013, interest and penalties represented approximately $673,000 and $100,000, respectively, of the gross unrecognized tax benefits.

We are subject to tax by both federal and state taxing authorities. Until the respective statutes of limitations expire, we are subject to income tax audits in the jurisdictions in which we operate. We are no longer subject to U.S. federal tax examinations for fiscal years prior to 2010, and we are not subject to audits prior to the 2009 fiscal year for the majority of the state jurisdictions.

It is reasonably possible that a change to the total amount of unrecognized tax benefits could occur in the next 12 months based on examinations by tax authorities, the expiration of statutes of limitations, or potential settlements of outstanding positions.