Income Taxes

9 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

(5) Income Taxes

The following is our tax position at June 30, 2013 and 2012:

The provision for income taxes was comprised of the following for the nine months ended June 30, 2013 and 2012:

	6/30/2013		6/30/2012
Current
Federal	$	1,011,800	$	52,600
State		208,500		22,000
		1,220,300		74,600
Deferred
Federal		854,400		392,700
State		195,700		97,800
		1,050,100		490,500
Total	$	2,270,400	$	565,100

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities as of June 30, 2013 and September 30, 2012 are presented below:

	6/30/2013			9/30/2012
Current deferred tax assets:
Accrued compensation	$	20,200		$	23,900
Deferred rent		18,900			35,900
Capital loss carryforward		110,400			—
State taxes		—			9,700
Charitable contribution carryover		71,300			96,200
Gross deferred tax assets		220,800			165,700
Less: Disallowed capital loss		(110,400	)		—
Net deferred tax assets		110,400			165,700
Noncurrent deferred tax liabilities:
Net operating loss		—			44,800
Property and equipment		(45,300	)		(7,300	)
Management contracts		(5,476,800	)		(4,566,600	)
Total deferred tax liabilities		(5,522,100	)		(4,529,100	)
Net deferred tax liabilities	$	(5,411,700	)	$	(4,363,400	)

The Company files U.S. federal and state tax returns and has determined that its major tax jurisdictions are the United States and California. The tax years ended in 2010 through 2012 remain open and subject to examination by the appropriate governmental agencies in the U.S., and the tax years ended 2009 through 2012 remain open in California.

The Company’s effective tax rates for the nine months ended June 30, 2013 and 2012 were 41.1% and 44.6%, respectively, and differ from the federal statutory rate of 34% for the following principal reasons:

The principal reasons for the differences from the federal statutory rate of 34% are as follows:

	6/30/2013			6/30/2012
Federal tax at statutory rate		34.0	%		34.0	%
State tax at statutory rate		5.8	%		5.8	%
Permanent differences		0.5	%		4.8	%
Disallowed capital loss		0.8	%		0.0	%
Effective Tax Rate		41.1	%		44.6	%

The effective tax rate, which is normally about 40%, was higher for the current period ended June 30, 2013 due to a disallowed capital loss carryforward created by a realized loss on the sale of the available for sale investment. The effective tax rate for the prior period ended June 30, 2012 was higher due to a one-time revaluation of the Company’s state deferred tax liabilities to reflect a higher blended state tax rate.