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INCOME TAXES | 12 Months Ended
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Sep. 30, 2018
INCOME TAXES |
INCOME TAXES | 7. INCOME TAXES: The components of income tax expense from operations for fiscal 2018 and fiscal 2017 consisted of the following:
|  | 2018 |  | 2017 |
Current: Federal |  | $ | 1,294,253 |  | $ | 2,348,725 |
Current: State |  |  | 423,209 |  |  | 383,662 |
|  |  | 1,717,462 |  |  | 2,732,387 |
Deferred: Federal |  |  | (470,166) |  |  | (223,283) |
Deferred: State |  |  | (83,296) |  |  | (20,104) |
|  |  | (553,462) |  |  | (243,387) |
Income tax expense |  | $ | 1,164,000 |  | $ | 2,489,000 |
The difference between the Company’s income tax expense in the accompanying consolidated financial statements and that which would be calculated using the statutory income tax rate of approximately 24% and 34% for fiscal 2018 and fiscal 2017, respectively on income before income taxes is as follows:
|  | 2018 |  | 2017 |
Tax at statutory rate |  | $ | 1,160,247 |  | $ | 1,903,502 |
Nondeductible business expenses |  |  | 405,996 |  |  | 402,980 |
State income taxes, net of federal tax benefit |  |  | 306,918 |  |  | 244,587 |
Change in deferred tax rate due to tax reform legislation |  |  | (778,000) |  |  | — |
Other |  |  | 68,839 |  |  | (62,069) |
|  | $ | 1,164,000 |  | $ | 2,489,000 |
Temporary differences between the financial statement carrying balances and tax basis of assets and liabilities giving rise to a net deferred tax assets (liabilities) at September 2018 and September 2017 relates to the following:
|  | 2018 |  | 2017 |
Deferred tax assets: |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 210,734 |  | $ | 282,576 |
Accrued expenses |  |  | 779,282 |  |  | 1,185,624 |
Inventory |  |  | 272,946 |  |  | 502,042 |
Other |  |  | 23,237 |  |  | — |
Property and equipment |  |  | — |  |  | 28,713 |
Net operating loss carry forwards - federal |  |  | 92,421 |  |  | 195,675 |
Net operating loss carry forwards - state |  |  | 697,013 |  |  | 592,559 |
Total gross deferred tax assets |  |  | 2,075,633 |  |  | 2,787,189 |
Less: Valuation allowance |  |  | (697,013) |  |  | (592,559) |
Total net deferred tax assets |  |  | 1,378,620 |  |  | 2,194,630 |
Deferred tax liabilities: |  |  |  |  |  |  |
Trade discounts |  |  | 285,439 |  |  | 410,793 |
Property and equipment |  |  | 1,361,508 |  |  | 1,395,560 |
Goodwill |  |  | 921,799 |  |  | 1,381,953 |
Intangible assets |  |  | 592,675 |  |  | 1,342,587 |
Total deferred tax liabilities |  |  | 3,161,421 |  |  | 4,530,893 |
Total net deferred income tax liability |  | $ | 1,782,801 |  | $ | 2,336,263 |
The Company’s fiscal 2018 income tax rate and results of operations were impacted by the enactment of the Tax Cuts and Jobs Act (“Tax Reform Act”), which was signed into law on December 22, 2017. Among the numerous provisions included in the Tax Reform Act was a reduction in the corporate federal income tax rate from 35% to 21%. The Company applied the newly enacted corporate federal income tax rate during the first quarter of fiscal 2018 resulting in an income tax benefit of approximately $0.8 million, primarily related to the application of the new lower income tax rates to net long term deferred tax liabilities recorded on the Company’s Consolidated Balance Sheet. The application of the Tax Reform Act also resulted in blended federal income tax rate of approximately 24% for fiscal 2018, reflecting a portion of the fiscal year at both the old and new federal income tax rates. At September 2018, the Company had a $0.1 million noncurrent deferred tax asset related to federal net operating loss carryforwards. These federal net operating loss carryforwards totaled approximately $0.4 million and were primarily attributable to the Company’s fiscal 2002 purchase of Hawaiian Natural Water Company, Inc. (“HNWC”), a wholly owned subsidiary of the Company. The utilization of HNWC’s net operating losses is limited by Internal Revenue Code Section 382 to approximately $0.1 million per year through 2022. The Company had a valuation allowance of approximately $0.7 million and $0.6 million at September 2018 and September 2017, respectively, against certain state net operating losses, which more likely than not will not be utilized. The Company had no material unrecognized tax benefits, interest, or penalties during fiscal 2018 or fiscal 2017, and the Company does not anticipate any such items during the next twelve months. The Company’s policy is to record interest and penalties directly related to income taxes as income tax expense in the Consolidated Statements of Operations. The Company files income tax returns in the U.S. and various states and the tax years 2015 and forward remain open under U.S. and state statutes.

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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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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