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Note 12 - Income Taxes
 3 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

12.

Income Taxes

 

The effective tax rates for the three-month periods ended December 31, 2024 and 2023 reflected in the table below are less than the combined federal and state statutory rate of 25.74%.  The reduction to the effective tax rates is due to additional tax deductions from the amortization of excess deferred taxes and amortization of RNG tax credits deferred as a regulatory liability.  

 

  

Three Months Ended December 31,

 
  

2024

  

2023

 

Effective tax rate

  23.4%  24.0%

 

ASC 740 provides for the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recognized in the financial statements.  The Company recorded a reserve for unrecognized tax benefits of $273,936 as of December 31, 2024 and September 30, 2024 related to tax positions taken in the Company's prior tax returns. The Company has evaluated its tax positions for the three months ended December 31, 2024 and determined no additional reserve for unrecognized tax benefits was necessary.  A reconciliation of the Company's unrecognized tax benefits is as follows:

 

  

December 31, 2024

 

Beginning balance

 $273,936 

Increase resulting from prior period tax positions

  — 

Ending balance

 $273,936 

 

The Company’s policy is to classify interest associated with uncertain tax positions as interest expense in the financial statements. Tax penalties, if any, are netted against other income.

 

The Company files a consolidated federal income tax return and state income tax returns in Virginia and West Virginia, and thus subject to examinations by federal and state tax authorities.  The IRS is currently examining the Company's 2018 and 2019 amended federal tax returns.  The focus of the examination relates to research and development credits, and the results of the examination have not been presented to the Company as of the date of this Form 10-Q.  The Company believes its income tax assets and liabilities are fairly stated as of December 31, 2024 and 2023; however, these assets and liabilities could be adjusted as a result of this examination.  The Company's amended federal returns for fiscal 2018 and 2019 remain open related to the examination.  Aside from these exceptions, the federal returns and the state returns for Virginia and West Virginia for the tax years ended prior to September 30, 2021 are no longer subject to examination.