Income Taxes (Tables)
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12 Months Ended |
Sep. 30, 2020 |
Income Tax Disclosure [Abstract] |
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Components of Income Tax Expense |
The components of income tax benefit (expense) for the years ended September 30, 2020, 2019 and 2018 are as follows: | | | | | | | | | | | | | | | | | | | | | | | Year Ended September 30, | 2020 | | 2019 | | 2018 | Current benefit (expense): | | | | | | | United States federal | | $ | 11,250 | | | $ | 2 | | | $ | 125 | | State | | (303) | | | (205) | | | 78 | | Total current benefit (expense) | | 10,947 | | | (203) | | | 203 | | Deferred benefit (expense): | | | | | | | United States federal | | (345) | | | — | | | 2,878 | | State | | — | | | — | | | (66) | | Total deferred benefit (expense) | | (345) | | | — | | | 2,812 | | Total income tax benefit (expense) | | $ | 10,602 | | | $ | (203) | | | $ | 3,015 | |
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Reconciliation of Tax Rate |
The income tax provision differs from the tax that would result from application of the statutory federal tax rate of 21.0% to pre-tax income for the years ended September 30, 2020 and September 30, 2019, and 24.5% to pre-tax income for the year ended September 30, 2018. The reasons for the differences are as follows: | | | | | | | | | | | | | | | | | | | Year Ended September 30, | 2020 | | 2019 | | 2018 | Income tax benefit at statutory rate | $ | 545 | | | $ | 1,610 | | | $ | 8,746 | | State income taxes, net of federal tax benefit | (246) | | | (165) | | | 12 | | Change in federal statutory rate | — | | | — | | | (12,645) | | | | | | | | Decrease (increase) in valuation allowance | 6,135 | | | (1,514) | | | 7,066 | | Net operating losses carryback to higher federal statutory rate years | 4,270 | | | — | | | — | | Other, net | (102) | | | (134) | | | (164) | | Total income tax benefit (expense) | $ | 10,602 | | | $ | (203) | | | $ | 3,015 | |
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Components of Deferred Tax Assets (Liabilities) |
The components of the deferred tax assets (liabilities) recorded in the accompanying consolidated balance sheets were as follows: | | | | | | | | | | | | | | | | | September 30, | 2020 | | 2019 | Gross deferred tax assets: | | | | | Right-of-use assets for operating leases | | $ | 40,515 | | | $ | — | | Deferred compensation | | $ | 802 | | | $ | 1,449 | | Accrued compensation | | 3,940 | | | 2,432 | | Accrued tool sets | | 831 | | | 694 | | Other reserves and accruals | | 2,665 | | | 1,884 | | Deferred revenue | | 4,406 | | | 4,324 | | Deferred rent liability | | — | | | 3,024 | | Financing obligation | | — | | | 10,178 | | Net operating losses | | 6,729 | | | 12,639 | | Tax credit carryforwards | | 293 | | | 205 | | Charitable contribution carryovers | | 1,527 | | | 1,234 | | Deductions limited by Section 382 | | 764 | | | 670 | | Valuation allowance | | (17,449) | | | (25,673) | | Total gross deferred tax assets | | 45,023 | | | 13,060 | | Gross deferred tax liabilities: | | | | | Operating lease liability | | (37,083) | | | — | | Amortization of goodwill and intangibles | | (2,056) | | | (2,056) | | Depreciation and amortization of property and equipment | | (5,547) | | | (10,470) | | Prepaid and other expenses deductible for tax | | (1,011) | | | (863) | | Total gross deferred tax liabilities | | (45,697) | | | (13,389) | | Net deferred tax liabilities | | $ | (674) | | | $ | (329) | |
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Summary of Valuation Allowance |
The following table summarizes the activity for the valuation allowance for the years ended September 30 2020, 2019 and 2018:
| | | | | | | | | | | | | | | | | | | | | | | Year Ended September 30, | | | 2020 | | 2019 | | 2018 | Balance at beginning of period | | $ | 25,673 | | | $ | 23,112 | | | $ | 38,407 | | Additions (reductions) to income tax | | (5,947) | | | 2,561 | | | (5,555) | | Write-offs(1) | | (2,277) | | | — | | | (9,740) | | Balance at end of period | | $ | 17,449 | | | $ | 25,673 | | | $ | 23,112 | |
(1) Of this total, approximately $9.6 million and $2.3 million related to our adoption of ASC 606 as of October 1, 2017 and our adoption of ASC 842 as of October 1, 2019, respectively.
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