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Income Taxes | 12 Months Ended
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Sep. 30, 2018
Income Tax Disclosure [Abstract] |
Income Taxes |
11. | Income Taxes
The provision for income taxes consists of the following:
|  | Years Ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | (in thousands) |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State |  |  | 465 |  |  |  | 359 |  |  |  | 413 |
|  | $ | 465 |  |  | $ | 359 |  |  | $ | 413 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (17,308 | ) |  |  | 17,713 |  |  |  | 8,982 |
State |  |  | (583 | ) |  |  | 2,802 |  |  |  | 531 |
|  | $ | (17,891 | ) |  | $ | 20,515 |  |  | $ | 9,513 |
(Benefit) provision for income taxes |  | $ | (17,426 | ) |  | $ | 20,874 |  |  | $ | 9,926 |
Reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows:
|  | Years Ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | (in thousands) |
Income tax expense at federal statutory rate |  | $ | 3,878 |  |  | $ | 18,796 |  |  | $ | 8,696 |
(Reduction) increase in income taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
State taxes, net of federal tax benefit |  |  | 660 |  |  |  | 1,397 |  |  |  | 792 |
Nondeductible stock compensation expenses |  |  | — |  |  |  | — |  |  |  | — |
Permanent items |  |  | 63 |  |  |  | 92 |  |  |  | 71 |
Change in valuation allowances |  |  | (646 | ) |  |  | 531 |  |  |  | 249 |
US Tax Cuts and Jobs Act Impact |  |  | (22,015 | ) |  |  | — |  |  |  | — |
Impact of changing rates on deferred tax assets |  |  | (773 | ) |  |  | (353 | ) |  |  | (673 | )
Expired tax attributes |  |  | 1,088 |  |  |  | 409 |  |  |  | 380 |
Other |  |  | 319 |  |  |  | 2 |  |  |  | 411 |
Income tax (benefit) expense |  | $ | (17,426 | ) |  | $ | 20,874 |  |  | $ | 9,926 |
The Company's deferred tax assets as of September 30, 2018 and 2017 are as follows:
|  | Years Ended September 30, |
|  | 2018 |  |  | 2017 |
|  | (in thousands) |
Net operating loss carry forwards |  | $ | 91,981 |  |  | $ | 103,653 |
Deferred credits |  |  | 2,443 |  |  |  | 4,389 |
Other accrued expenses |  |  | 1,871 |  |  |  | 1,756 |
Prepaids and other |  |  | 3,530 |  |  |  | 8,936 |
Alternative minimum tax |  |  | 1 |  |  |  | 2,536 |
Other reserves and estimated losses |  |  | 836 |  |  |  | 1,335 |
Operating lease |  |  | 6,399 |  |  |  | 13,113 |
Allowance for doubtful receivables |  |  | 905 |  |  |  | 1,087 |
Subtotal |  | $ | 107,966 |  |  | $ | 136,805 |
Less: valuation allowance |  |  | (1,940 | ) |  |  | (2,586 | )
Total net deferred tax assets |  | $ | 106,026 |  |  | $ | 134,219 |
Intangibles |  |  | (2,613 | ) |  |  | (4,317 | )
Property and equipment |  |  | (143,210 | ) |  |  | (186,338 | )
Total deferred tax liabilities |  | $ | (145,823 | ) |  | $ | (190,655 | )
Net deferred tax liability |  | $ | (39,797 | ) |  | $ | (56,436 | )
We have federal and state income tax NOL carryforwards of $415.1 million and $199.6 million, which expire in 2027-2037 and 2019-2038, respectively. We believe that it is more likely than not that the benefit from certain state NOL carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $1.9 million in fiscal year 2018 and $2.6 million in fiscal year 2017 on the deferred tax assets related to these state NOL carryforwards. If or when recognized, the tax benefits related to any reversal of the valuation allowance on deferred tax assets will be recognized as a reduction of income tax expense. The federal and state NOL carryforwards in the income tax returns filed included unrecognized tax benefits. The deferred tax assets recognized for those NOLs are presented net of these unrecognized tax benefits. Because of the change of ownership provisions of the Tax Reform Act of 1986, use of a portion of our NOL and tax credit carryforwards may be limited in future periods. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities. The initial public offering in August of 2018 resulted in a change in ownership under Section 382 of the Internal Revenue Code. Based on the valuation of the Company's stock as of the initial public offering date, the Company does not believe any limitation on the utilization of the Company's current net operating losses would be applicable as of September 30, 2018. As a result of adopting ASU 2016-09, the table of deferred tax assets and liabilities includes $0.4 million of deferred tax assets previously unrecognized that arose directly from, or the use of which was postponed by, tax deductions related to equity compensation greater than the compensation recognized for financial reporting. These previously recognized deferred tax assets are related to excess tax benefits incurred in years prior to September 30, 2018. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:
|  | Years Ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | (in thousands) |
Unrecognized tax benefits — October 1 |  | $ | 7,547 |  |  | $ | 7,547 |  |  |  | 7,547 |
Gross increases — tax positions in prior period |  |  | — |  |  |  | — |  |  |  | — |
Gross decreases — tax positions in prior period |  |  | (2,859 | ) |  |  | — |  |  |  | — |
Gross increases — tax positions in current period |  |  | — |  |  |  | — |  |  |  | — |
Settlement |  |  | — |  |  |  | — |  |  |  | — |
Lapse of statute of limitations |  |  | — |  |  |  | — |  |  |  | — |
Unrecognized tax benefits — September 30 |  | $ | 4,688 |  |  | $ | 7,547 |  |  | $ | 7,547 |
Included in the balance of unrecognized tax benefits are $4.7 million, $7.5 million and $7.5 million of tax benefits as of September 30, 2018, 2017 and 2016, respectively, that, if recognized, would result in adjustments to primarily deferred taxes. The decrease in the year ended September 30, 2018 is a result of the change in federal tax rate that reduces the benefit that would be recognized if the unrecognized tax benefit was resolved favorably. We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. We have not recorded accrued penalties or interest related to the unrecognized tax benefits noted above as the amounts would result in an adjustment to NOL carry forwards. We are subject to taxation in the United States and various states. As of September 30, 2018, the Company is no longer subject to U.S. federal or state examinations by taxing authorities for years prior to 1999. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code that affected the Company’s fiscal year ended September 30, 2018, including but not limited to (1) reducing the U.S. federal corporate tax rate, (2) changing rules related to uses and limitations of NOL carryforwards created in tax years beginning after December 31, 2017, (3) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized, and (4) bonus depreciation that will allow for full expensing of qualified property. The Tax Act reduces the federal corporate tax rate to 21% in our fiscal year ended September 30, 2018. The Internal Revenue Code stipulates that the Company’s fiscal year ended September 30, 2018, will have a blended corporate tax rate of 24.5%, which is based on the applicable tax rates before and after the Tax Act and the number of days in the year. The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. In connection with our initial analysis of the impact of the Tax Act, we have recorded a discrete net tax benefit of $22.0 million in the period ending September 30, 2018. As discussed more fully below, the Company has not completed its accounting for the income tax effects of certain elements of the Tax Act. The Company has recorded provisional adjustments where reasonable adjustments are available. Where reasonable adjustments are not available, the Company has not recorded any provisional adjustments and continues to account for them in accordance with ASC 740. Our accounting for the following elements of the Tax Act is complete: Reduction of U.S. federal corporate tax rate: The Act reduces the corporate tax rate to 21 percent, effective January 1, 2018. Consequently, we have recorded a decrease related to our net deferred tax liabilities of $22.0 million, excluding the valuation allowance. The Company has also estimated an increase to its valuation allowance of $0.5 million due to the rate change. We have recorded a corresponding net adjustment to deferred income tax benefit of $21.5 million for the period ending September 30, 2018. Elimination of Corporate AMT and Refund of AMT Credits: For tax years beginning after December 31, 2017, the corporate AMT was repealed. The Act allows the use of existing corporate AMT credits to offset regular tax liability for tax years after December 31, 2017. AMT credits in excess of regular liability are refundable in the years 2018 through 2021. At September 30, 2018, the Company had $2.5 million of AMT credits, all of which is expected to be refunded. We have reclassified the AMT credits to long-term receivable. The Company was not able to make reasonable estimates or, correspondingly, record provisional adjustments for the following: Valuation allowances: The Company must determine whether the state valuation allowance assessments are affected by various aspects of the Tax Act (e.g. section 163(j), state effect of The Act, net operating loss carryforwards). Any corresponding determinations relating to changes in valuation allowances have, likewise, not been completed or recorded.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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