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Note 12 - Income Taxes | 12 Months Ended
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Sep. 30, 2024
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
(12) | Income Taxes
As of the end of each of fiscal years 2024 and 2023, the Company’s gross liability for unrecognized tax benefits related to uncertain tax positions was $0.4 million and $0.4 million, respectively. If the tax benefits of such amounts were recognized, $0.3 million and $0.3 million of such amounts, respectively, would decrease the Company’s effective income tax rate. As of September 30, 2024, and September 30, 2023,the Company’s net liability for accrued interest and penalties was $0.4 million and $0.3 million, respectively. The Company has elected to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company recognized approximately $0.05 million in interest and penalties during each of the years ended September 30, 2024, and September 30, 2023. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | Fiscal Years Ended September 30, |
|  | 2024 |  |  | 2023 |
|  | (In thousands) |
Beginning year balance |  | $ | 353 |  |  | $ | 353 |
Changes related to prior year tax positions |  |  | - |  |  |  | - |
Ending year balance |  | $ | 353 |  |  | $ | 353 |
The total amount of unrecognized tax benefits can change due to final regulations, audit settlements, tax examinations activities, lapse of applicable statutes of limitations, and the recognition and measurement criteria under the guidance related to accounting for uncertainly in income taxes. The Company is unable to estimate what this change could be within the next 12 months, but does not believe it would be material to its financial statements. The Company’s income tax expense was as follows:
|  | Fiscal Years Ended September 30, |
|  | 2024 |  |  | 2023 |
|  | (In thousands) |
Current |  |  |  |  |  |  |  |
Federal |  | $ | 1,179 |  |  | $ | 485 |
State |  |  | 377 |  |  |  | 221 |
Total current |  |  | 1,556 |  |  |  | 706 |
Deferred |  |  |  |  |  |  |  |
Federal |  |  | 828 |  |  |  | 955 |
State |  |  | 223 |  |  |  | 168 |
Total deferred |  |  | 1,051 |  |  |  | 1,123 |
Total |  | $ | 2,607 |  |  | $ | 1,829 |
The principal reasons for the differences from the federal statutory income tax rate and the Company’s effective tax rate were as follows:
|  | Fiscal Years Ended September 30, |
|  | 2024 |  |  | 2023 |
Federal statutory income tax rate |  |  | 21.0 | % |  |  | 21.0 | %
State income taxes, net of federal benefit |  |  | 4.1 |  |  |  | 4.0 |
Permanent and other differences |  |  | 0.8 |  |  |  | (0.4 | )
Difference due to executive compensation |  |  | 1.5 |  |  |  | 0.7 |
Tax return to provision adjustments |  |  | (0.1 | ) |  |  | 0.8 |
Uncertain tax position |  |  | 0.5 |  |  |  | 0.9 |
Stock-based compensation |  |  | (0.9 | ) |  |  | 0.7 |
Effective income tax rate |  |  | 26.9 | % |  |  | 27.7 | %
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities were as follows:
|  | Fiscal Years Ended September 30, |
|  | 2024 |  |  | 2023 |
|  | (In thousands) |
Deferred tax assets |  |  |  |  |  |  |  |
Accrued compensation |  | $ | - |  |  | $ | 37 |
Stock compensation |  |  | 33 |  |  |  | 18 |
State taxes |  |  | 224 |  |  |  | 176 |
Capital loss carryforward |  |  | - |  |  |  | 7 |
Lease liability |  |  | 258 |  |  |  | 70 |
Gross deferred tax assets |  |  | 515 |  |  |  | 308 |
Disallowed capital loss |  |  | - |  |  |  | (7 | )
Net deferred tax assets |  |  | 515 |  |  |  | 301 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Property and equipment |  |  | (28 | ) |  |  | (31 | )
Management contracts |  |  | (15,895 | ) |  |  | (14,807 | )
ROU asset |  |  | (254 | ) |  |  | (74 | )
Total deferred tax liabilities |  |  | (16,177 | ) |  |  | (14,912 | )
Net deferred tax liabilities |  | $ | (15,662 | ) |  | $ | (14,611 | )

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