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Income Taxes | 12 Months Ended
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Sep. 30, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes DLH accounts for income taxes in accordance with the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized. This guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized. Due to our recent trend of positive operating results, in the fiscal year ended September 30, 2014 we realized a $4.6 million tax benefit, net, related to the release of a portion of our valuation allowance, to reflect the amount of our deferred tax asset that we expect to realize in future years. This release is based upon our current estimate of future taxable earnings based on results generated through the fiscal year ended September 30, 2014. To project taxable income in the carryforward period, we first estimated revenue for the carryforward period based on the expected performance under current contracts, plus expected changes in the contract base. Using these estimates of revenue, we assumed a proportional level of book income as was generated from the revenues recorded in the fiscal year ended September 30, 2014. We further assumed that tax goodwill amortization would continue through its 15 year life. Using the taxable income projection, we calculated the amount of NOL utilization that would be achieved within each loss year’s carryforward period. Our estimate of future taxable income will be revised at least annually or more frequently upon the occurrence of an event which warrants a new estimate. In the fiscal year ended September 30 2013 the Company did not recognize a tax expense or benefit. At September 30, 2014 the Company had net operating losses of approximately $40.8 million and $29.2 million for U.S. and state tax return purposes, respectively, and unutilized tax credits of approximately $1.1 million. As a result of previous business combinations and changes in its ownership, there is a substantial amount of NOLs that are subject to annual limitations on utilization. The U.S. NOLs begin to expire in 2021 and continue to expire through 2033. An analysis of DLH's deferred tax asset and liability is as follows:
|  | Year Ended
|  | September 30,
(amounts in thousands) |  | 2014 |  | 2013
Current deferred income tax asset: |  |  |  |
Net operating loss carryforwards and tax credits |  | $ | 98 |  |  | $ | — |
Accrued liabilities |  | 122 |  |  | — |
Valuation allowance |  | (136 | ) |  | — |
Net current deferred tax asset |  | $ | 84 |  |  | $ | — |
|  | Year Ended
|  | September 30,
(amounts in thousands) |  | 2014 |  | 2013
Deferred income tax asset (liability): |  |  |  |
Net operating loss carry forwards and tax credits |  | $ | 16,556 |  |  | $ | 16,944 |
Prepaid workers' compensation |  | 273 |  |  | 225 |
Deferred rent |  | 8 |  |  | 9 |
Accrued liabilities |  | 336 |  |  | 431 |
Stock based compensation |  | 646 |  |  | 500 |
Fixed and intangible assets |  | (2,176 | ) |  | (1,989 | )
Other items, net |  | (129 | ) |  | (83 | )
Valuation allowance |  | (11,001 | ) |  | (16,037 | )
Net deferred tax asset |  | $ | 4,513 |  |  | $ | — |
The significant components of the expense (benefit) for income taxes from continuing operations are summarized as follows:
|  | Year Ended
|  | September 30,
(amounts in thousands) |  | 2014 |  | 2013
Current expense (benefit) |  | $ | 7 |  |  | $ | — |
Deferred expense (benefit) |  | (4,604 | ) |  | — |
Total expense (benefit) |  | $ | (4,597 | ) |  | $ | — |
The following table indicates the significant differences between the federal statutory rate and DLH's effective tax rate for continuing operations:
|  | Year Ended
|  | September 30,
(amounts in thousands) |  | 2014 |  | 2013
Federal statutory rate |  | $ | 258 |  |  | $ | (54 | )
State taxes, net |  | 46 |  |  | — |
Other permanent items |  | 6 |  |  | 3 |
Tax credits |  | (7 | ) |  |
Change in valuation allowance |  | (4,900 | ) |  | 51 |
|  | $ | (4,597 | ) |  | $ | — |

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- 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 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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=6907707&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=6907707&loc=d3e32537-109319 Reference 6: 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=6907707&loc=d3e32559-109319 + Details
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