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17. Income Taxes | 12 Months Ended
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Sep. 30, 2017
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, 2017 and 2016 is as follows:
|  | 2017 |  |  | 2016 (Restated) |
Current expense: |  |  |  |  |  |  |  |
Federal |  | $ | 313,405 |  |  | $ | 103,704 |
State |  |  | 243,841 |  |  |  | 52,745 |
|  |  | 557,246 |  |  |  | 156,449 |
Deferred expense: |  |  |  |  |  |  |  |
Federal |  |  | 3,397,732 |  |  |  | (15,114,529 | )
State |  |  | 126,841 |  |  |  | (609,764 | )
|  |  | 3,524,573 |  |  |  | (15,724,293 | )
Total income tax expense |  | $ | 4,081,819 |  |  | $ | (15,567,844 | )
A reconciliation of the differences between the effective and statutory income tax rates for years ended September 30:
|  | 2017 |  |  | 2016 (Restated) |
|  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |
Federal statutory rates |  | $ | 3,598,424 |  |  |  | 34% |  |  | $ | 1,830,150 |  |  |  | 77% |
State income taxes |  |  | 299,216 |  |  |  | 3% |  |  |  | 161,484 |  |  |  | 7% |
Permanent differences |  |  | 71,908 |  |  |  | 1% |  |  |  | (1,798,450 | ) |  |  | -75% |
Net operating loss adjustment |  |  | – |  |  |  |  |  |  |  | (1,194,004 | ) |  |  | -50% |
Property & equipment adjustment |  |  | – |  |  |  |  |  |  |  | 742,854 |  |  |  | 31% |
Equity compensation adjustment |  |  | – |  |  |  |  |  |  |  | (2,872,210 | ) |  |  | -120% |
Valuation allowance against net deferred tax assets |  |  | – |  |  |  |  |  |  |  | (12,284,278 | ) |  |  | -515% |
Other |  |  | 112,271 |  |  |  | 1% |  |  |  | (153,390 | ) |  |  | -6% |
Effective rate |  | $ | 4,081,819 |  |  |  | 39% |  |  | $ | (15,567,844 | ) |  |  | -652% |
At September 30, deferred income tax assets and liabilities were comprised of:
|  | 2017 |  |  | 2016 (Restated) |
Deferred income tax asset, current: |  |  |  |  |  |  |  |
Allowance for bad debts |  | $ | 401,866 |  |  | $ | 406,733 |
Accrued expenses |  |  | 31,183 |  |  |  | 241,536 |
Inventory |  |  | 772,657 |  |  |  | 414,575 |
Accrued compensation |  |  | – |  |  |  | – |
Total deferred income tax asset, current |  |  | 1,205,706 |  |  |  | 1,062,844 |
Less: valuation allowance |  |  | – |  |  |  | – |
Deferred income tax asset, current, net |  |  | 1,205,706 |  |  |  | 1,062,844 |
Deferred income tax asset (liability), long-term: |  |  |  |  |  |  |  |
Net operating loss |  |  | 7,804,948 |  |  |  | 9,915,371 |
Tax credits |  |  | 377,776 |  |  |  | – |
Other |  |  | 3,743 |  |  |  | – |
Stock compensation |  |  | 2,982,009 |  |  |  | – |
Intangibles |  |  | 13,126 |  |  |  | 794,455 |
Property & equipment |  |  | (3,387,298 | ) |  |  | 751,912 |
Total deferred income tax asset, long-term |  |  | 7,794,304 |  |  |  | 11,461,738 |
Less: valuation allowance |  |  | – |  |  |  | – |
Deferred income tax asset, net |  |  | 7,794,304 |  |  |  | 11,461,738 |
Total deferred income tax asset |  | $ | 9,000,010 |  |  | $ | 12,524,582 |
We reduced our valuation allowance by $12,284,278 (as restated) based on the profitable operations of our acquired Marquis subsidiary that can be offset against our net operation loss carryforwards, this release in valuation allowance occurred during the period ending September 30, 2016. The Company annually conducts an analysis of its tax positions and has concluded that it has no uncertain tax positions as of September 30, 2017. The Company’s policy is to record uncertain tax positions as a component of income tax expense. The Company has net operating loss carry-forwards of approximately $22.7 million as of September 30, 2017 and tax credit carry-forwards of $0.4 million respectively. The net operating loss amounts are subject to IRS code section 382 limitations and expire in 2027. The 2014 through 2016 tax years are open to examination by the various federal and state jurisdictions. The Company restated the prior year deferred income taxes related to the Marquis acquisition. Certain deferred tax items were not recorded by the Company. The Company has adjusted the deferred taxes associated with property and equipment and stock compensation.
|  | September 30, 2016 |
|  | As previously |  |  |  |  |  |  |
|  | Reported |  |  | Adjustment |  |  | As restated |
Income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal statuary rate |  | $ | 1,830,150 |  |  | $ | – |  |  | $ | 1,830,150 |
State taxes, net of federal benefit |  |  | 161,484 |  |  |  | – |  |  |  | 161,484 |
Permanent difference |  |  | (852,646 | ) |  |  | (945,804 | ) |  |  | (1,798,450 | )
Net operating loss adjustment |  |  | (1,083,866 | ) |  |  | (110,138 | ) |  |  | (1,194,004 | )
Property and equipment adjustment |  |  | – |  |  |  | 742,854 |  |  |  | 742,854 |
Equity compensation adjustment |  |  | – |  |  |  | (2,872,210 | ) |  |  | (2,872,210 | )
Valuation allowance |  |  | (12,284,278 | ) |  |  | – |  |  |  | (12,284,278 | )
Other |  |  | (264,065 | ) |  |  | 110,675 |  |  |  | (153,390 | )
|  | $ | (12,493,221 | ) |  | $ | (3,074,623 | ) |  | $ | (15,567,844 | )

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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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