Income Taxes |
6 Months Ended | ||
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Mar. 31, 2021 | |||
Income Tax Disclosure [Abstract] | |||
Income Taxes |
For the three months ended March 31, 2021 and 2020, the Company recorded an income tax benefit of $7,110 and $3,920, respectively, both of which were attributable to the Company’s domestic operations. The Company recorded an income tax benefit during the three and six months ended March 31, 2021 due to the Company’s ability and intent to carryback its current year tax loss under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) which was signed into law in March 2020. As of March 31, 2021 and September 30, 2020, the Company recorded prepaid federal income taxes of $18,804 and $10,487, respectively. For the three and six months ended March 31, 2020, the Company determined the use of the discrete method was more appropriate than the annual effective tax rate method due to the sensitivity of the Company’s tax rate in the prior period to small changes in projected pre-tax earnings, which resulted in significant variations in the customary relationship between income tax expense and pretax income. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. The Company’s tax years are still open under the statute for the year ended September 30, 2017 to the present. Earlier years may be examined to the extent that tax credit or net operating loss carryforwards are used in future or prior periods. The Company is not currently under examination by any jurisdiction for any tax year open under the statute. The Company had unrecognized tax benefits totaling $686 and $788 as of March 31, 2021, and September 30, 2020, respectively. Unrecognized tax benefits represent tax positions for which reserves have been established. The Company’s policy is to record interest and penalties related to uncertain tax positions as part of its income tax provision. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”). Under the CARES Act, the Company is permitted to carry back net operating losses originating beginning in fiscal 2018 through fiscal 2021 for up to five years. Net operating loss carrybacks were previously prohibited under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize net operating losses to offset taxable income in those prior years. In addition, the CARES Act makes qualified improvement property eligible for 15-year cost-recovery and 100% bonus depreciation. The impact of the CARES Act has been incorporated into the consolidated financial statements during the six months ended March 31, 2021. As of March 31, 2021, the Company recorded a valuation allowance against substantially all of its net deferred tax assets. The Company continues to believe it more likely that it will not have sufficient taxable income in the future that will allow it to realize all of its existing deferred tax assets. This is due to the fact the Company continues to progress its wholly-owned research and development programs and its declining royalty revenues from its Collaboration Agreement with AbbVie.
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