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14. Income Taxes | 12 Months Ended
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Sep. 30, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Income tax expense for the years ended September 30, 2016 and 2015 is as follows:
|  | 2016 |  |  | 2015 |
Current expense: |  |  |  |  |  |  |  |
Federal |  | $ | – |  |  | $ | 320,000 |
State |  |  | 31,161 |  |  |  | 56,000 |
|  |  | 31,161 |  |  |  | 376,000 |
Deferred expense: |  |  |  |  |  |  |  |
Federal |  |  | (12,524,582 | ) |  |  | – |
State |  |  | – |  |  |  | – |
|  |  | – |  |  |  | – |
Total income tax expense |  | $ | (12,493,221 | ) |  | $ | 376,000 |
A reconciliation of the differences between the effective and statutory income tax rates for years ended September 30:
|  | 2016 |  |  | 2015 |
|  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |
Federal statutory rates |  | $ | 1,830,150 |  |  |  | 34% |  |  | $ | (4,874,337 | ) |  |  | 34% |
State income taxes |  |  | 161,484 |  |  |  | 3% |  |  |  | (123,292 | ) |  |  | 1% |
Permanent differences |  |  | (852,646 | ) |  |  | -16% |  |  |  | 2,794,987 |  |  |  | -19% |
Net operating loss adjustment |  |  | (1,083,866 | ) |  |  | -20% |  |  |  | 327,477 |  |  |  | -2% |
Valuation allowance against net deferred tax assets |  |  | (12,284,278 | ) |  |  | -228% |  |  |  | 2,251,165 |  |  |  | -16% |
Other |  |  | (264,065 | ) |  |  | -5% |  |  |  | – |  |  |  | 0% |
Effective rate |  | $ | (12,493,221 | ) |  |  | -227% |  |  | $ | 376,000 |  |  |  | -3% |
At September 30, deferred income tax assets and liabilities were comprised of:
|  | 2016 |  |  | 2015 |
Deferred income tax asset, current: |  |  |  |  |  |  |  |
Book to tax differences in accounts receivable |  | $ | 406,733 |  |  | $ | 374,621 |
Book to tax differences in prepaid expenses |  |  | – |  |  |  | 65,467 |
Book to tax difference in accrued expenses |  |  | 241,536 |  |  |  | 144,961 |
Book to tax differences in inventory |  |  | 414,575 |  |  |  | – |
Total deferred income tax asset, current |  |  | 1,062,844 |  |  |  | 585,049 |
Less: valuation allowance |  |  | – |  |  |  | (585,049 | )
Deferred income tax asset, current, net |  |  | 1,062,844 |  |  |  | – |
Deferred income tax asset, long-term: |  |  |  |  |  |  |  |
Net operation loss carryforwards |  |  | 9,915,371 |  |  |  | 10,801,243 |
Book to tax differences in intangible assets |  |  | 633,869 |  |  |  | 632,557 |
Book to tax differences in organizational costs |  |  | 160,586 |  |  |  | 272,239 |
Book to tax differences in depreciation |  |  | 751,912 |  |  |  | (6,810 | )
Total deferred income tax asset, long-term |  |  | 11,461,738 |  |  |  | 11,669,229 |
Less: valuation allowance |  |  | – |  |  |  | (11,669,229 | )
Deferred income tax asset, net |  |  | 11,461,738 |  |  |  | – |
Total deferred income tax asset |  | $ | 12,524,582 |  |  | $ | – |
The Company has recorded as of September 30, 2016 and 2015 a valuation allowance of $0 and $12,284,278, respectively. We reduced our valuation allowance by $12,284,278 based on the profitable operations of our Marquis subsidiary that can be offset against our net operation loss carryforwards. The Company annually conducts an analysis of its tax positions and has concluded that it has no uncertain tax positions as of September 30, 2016. The Company has net operating loss carry-forwards of approximately $35.5 million. Such amounts are subject to IRS code section 382 limitations and expire in 2027. The 2011 to 2014 tax years are still subject to audit.

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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 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 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 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=65882285&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=65882285&loc=d3e32537-109319 + Details
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