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Income Taxes | 12 Months Ended
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Sep. 30, 2019
Income Tax Disclosure [Abstract] |
Income Taxes |
12. | Income Taxes
The provision (benefit) for income taxes consists of the following:
|  | Years Ended September 30, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands) |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (138 | ) |  | $ | — |  |  | $ | — |
State |  |  | 341 |  |  |  | 465 |  |  |  | 359 |
|  | $ | 203 |  |  | $ | 465 |  |  | $ | 359 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 13,238 |  |  |  | (17,308 | ) |  |  | 17,713 |
State |  |  | 2,265 |  |  |  | (583 | ) |  |  | 2,802 |
|  | $ | 15,503 |  |  | $ | (17,891 | ) |  | $ | 20,515 |
Provision (Benefit) for income taxes |  | $ | 15,706 |  |  | $ | (17,426 | ) |  | $ | 20,874 |
Reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows:
|  | Years Ended September 30, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands) |
Income tax expense at federal statutory rate |  | $ | 13,290 |  |  | $ | 3,878 |  |  | $ | 18,796 |
Increase (reduction) in income taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
State taxes, net of federal tax benefit |  |  | 1,785 |  |  |  | 660 |  |  |  | 1,397 |
Nondeductible stock compensation expenses |  |  | (21 | ) |  |  | — |  |  |  | — |
Permanent items |  |  | 261 |  |  |  | 63 |  |  |  | 92 |
Change in valuation allowances |  |  | (50 | ) |  |  | (646 | ) |  |  | 531 |
US Tax Cuts and Jobs Act Impact |  |  | — |  |  |  | (22,015 | ) |  |  | — |
162(m) Limitation |  |  | 119 |  |  |  |  |  |  |  |  |
Impact of changing rates on deferred tax assets |  |  | 484 |  |  |  | (773 | ) |  |  | (353 | )
Expired tax attributes |  |  | 111 |  |  |  | 1,088 |  |  |  | 409 |
Other |  |  | (273 | ) |  |  | 319 |  |  |  | 2 |
Income tax expense (benefit) |  | $ | 15,706 |  |  | $ | (17,426 | ) |  | $ | 20,874 |
The Company's deferred tax assets as of September 30, 2019 and 2018 are as follows:
|  | Years Ended September 30, |
|  | 2019 |  |  | 2018 |
|  | (in thousands) |
Net operating carry forwards |  | $ | 106,645 |  |  | $ | 91,981 |
Deferred credits |  |  | 1,882 |  |  |  | 2,443 |
Other accrued expenses |  |  | 2,329 |  |  |  | 1,871 |
Prepaids and other |  |  | 2,576 |  |  |  | 3,530 |
State alternative minimum tax |  |  | 1 |  |  |  | 1 |
Other reserves and estimated losses |  |  | 947 |  |  |  | 836 |
Operating lease |  |  | 4,928 |  |  |  | 6,399 |
Allowance for doubtful receivables |  |  | — |  |  |  | 905 |
Subtotal |  | $ | 119,308 |  |  | $ | 107,966 |
Less: valuation allowance |  |  | (1,890 | ) |  |  | (1,940 | )
Total net deferred tax assets |  | $ | 117,418 |  |  | $ | 106,026 |
Intangibles |  |  | (2,204 | ) |  |  | (2,613 | )
Property and equipment |  |  | (170,517 | ) |  |  | (143,210 | )
Total deferred tax liabilities |  | $ | (172,721 | ) |  | $ | (145,823 | )
Net deferred tax liability |  | $ | (55,303 | ) |  | $ | (39,797 | )
The Company has federal and state income tax NOL carryforwards of $478.3 million and $228.3 million, which expire in fiscal years 2027-2037 and 2020-2039, respectively. The Company believes that it is more likely than not that the benefit from certain state NOL carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $1.9 million in fiscal year 2019 and $1.9 million in fiscal year 2018 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, 2019. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:
|  | Years Ended September 30, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands) |
Unrecognized tax benefits — October 1 |  | $ | 4,688 |  |  | $ | 7,547 |  |  | $ | 7,547 |
Gross decreases — tax positions in prior period |  |  | — |  |  |  | (2,859 | ) |  |  | — |
Unrecognized tax benefits — September 30 |  | $ | 4,688 |  |  | $ | 4,688 |  |  | $ | 7,547 |
The Company’s unrecognized tax benefits of $4.7 million, $4.7 million and $7.5 million as of September 30, 2019, 2018 and 2017, respectively, is included the net deferred tax assets. If recognized, the balance of the uncertain tax benefit would affect the effective tax rate. 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, 2019, the Company is no longer subject to U.S. federal or state examinations by taxing authorities for fiscal years prior to 1999. The Tax Cuts and Jobs Act (the "Tax Act") made 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) altering bonus depreciation rules that will allow for full expensing of qualified property. The Tax Act reduced the federal corporate tax rate to 21% in the Company's fiscal year ended September 30, 2018 for the period beginning after December 31, 2017. For the fiscal year ended September 30, 2019, and onward, the applicable federal corporate tax rate is 21%. The SEC staff issued SAB 118, which provided guidance on accounting for the tax effects of the Tax Act. SAB 118 provided 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 was required to reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 was complete. To the extent that a company's accounting for certain income tax effects of the Tax Act was incomplete, but it was able to determine a reasonable estimate, it was required to record a provisional estimate in the financial statements. If a company was not able to determine a provisional estimate to be included in the financial statements, it continued 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. The one year measurement period ended during the Company's first quarter ended December 31, 2018. As a result, the Company finalized provisional amounts originally recorded in connection with the Tax Act in the first quarter of the fiscal year ended September 30, 2019. In connection with the Company's initial analysis of the impact of the Tax Act, it recorded a discrete net tax benefit of $22.4 million in the period ended September 30, 2018. The Company completed its accounting for the income tax effects of the Tax Act. The Company's accounting for the Tax Act was completed as follows: Reduction of U.S. federal corporate tax rate: The Act reduced the corporate tax rate to 21%, effective January 1, 2018. In the fourth quarter of the period ended September 30, 2018, the Company completed its analysis to determine the effect of the reduction of the U.S. federal corporate tax rate and recorded an adjustment of $0.9 million from the amount recorded in the first quarter of the 2018 fiscal year. Consequently, the effect for the fiscal year ended September 30, 2018 was a decrease related to the Company's net deferred tax liabilities of $22.0 million, excluding the valuation allowance. The Company also calculated an increase to its valuation allowance of $0.5 million due to the rate change. The Company recorded a corresponding net adjustment to its deferred income tax benefit of $21.5 million for the period ended September 30, 2018 as part of its completion of the accounting for Tax Act. For tax years beginning after December 31, 2017, the corporate AMT was repealed. AMT credits in excess of regular tax 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. The Company has classified a portion of the refund as a current receivable and a portion has been recorded as long-term receivable as of September 30, 2019. In the first quarter of fiscal 2019, the IRS released an announcement regarding Section 53(e) which no longer subjects taxpayers to a sequestration of its AMT credit refund. As a result, the Company reversed a tax expense of approximately $0.1 million related to an estimated sequestration accrual previously recorded during the tax year ended September 30, 2018, resulting in an income tax benefit of $0.1 million for the tax year ended September 30, 2019. Valuation allowances: The Company determined whether the federal and state valuation allowance assessments were affected by various aspects of the Tax Act. Any corresponding determinations relating to changes in valuation allowances have, likewise, been completed with no changes identified with respect to the provisional amounts 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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