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Income Taxes
3 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

On December 22, 2017, TCJA became law. The TCJA's most significant impact was the reduction of the maximum corporate federal income tax rate from 35% to 21% beginning January 1, 2018.

Under the provisions of ASC 740 - Income Taxes, the deferred tax assets and liabilities of the Company were revalued to reflect the reduction in the federal tax rate. For unregulated entities, the revaluation of excess deferred income taxes flowed through income tax expense in the period of change. For rate regulated entities such as Roanoke Gas, these excess deferred taxes were originally recovered from its customers based on billing rates derived using a federal income tax rate of 34%. As a result, these net excess deferred taxes must be returned to customers. The Company began refunding these excess deferred taxes in fiscal 2018. As the refunds should have no effect on the income of the Company, the consolidated income statements reflect both a reduction in revenues and a corresponding reduction in income taxes associated with the flow back of these net excess deferred taxes. The result is a lowering of the effective tax rate for the Company.

A reconciliation of income tax expense from applying the federal statutory rates in effect for each period to total income tax expense is presented below:

 
Three Months Ended December 31,
 
2019
 
2018
Income before income taxes
$
5,248,523

 
$
3,136,375

Corporate federal tax rate
21.00
%
 
21.00
%
 
 
 
 
Income tax expense computed at the federal statutory rate
$
1,102,190

 
$
658,639

State income taxes, net of federal tax benefit
250,037

 
150,589

Net amortization of excess deferred taxes on regulated operations
(86,208
)
 
(86,208
)
Other, net
(24,432
)
 
(20,807
)
Total income tax expense
$
1,241,587

 
$
702,213

 
 
 
 
Effective tax rate
23.7
%
 
22.4
%