INCOME TAXES

12 Months Ended

Sep. 30, 2023

INCOME TAXES

INCOME TAXES

15. INCOME TAXES

The components of income taxes are as follows:

	Year Ended September 30,
	2023		2022
Federal
Current	$	432,251	$	78,000
Deferred		1,865,019		1,686,864
Total		2,297,270		1,764,864
State
Current		127,568		22,000
Deferred		550,412		475,782
Total		677,980		497,782
Total income tax expense (benefit)	$	2,975,250	$	2,262,646

The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best estimate of current and future taxes to be paid. Significant judgments and estimates are required in the determination of the consolidated income tax expense. The Company’s provision for income taxes is computed by applying a federal rate of 21.0% and a state rate of 6.0% to taxable income or loss after consideration of non-taxable and non-deductible items.

The income tax expense for the fiscal year ended September 30, 2023 was $3.0 million and was due to an increase in taxable income. The income tax expense for the fiscal year ended September 30, 2022, was $2.3 million.

The effective income tax rate for the fiscal year ended September 30, 2023 was 28.7%. The effective income tax rate for the fiscal year ended September 30, 2022 was 37.6%. Effective income tax rates are estimates and may vary from period to period due to changes in the amount of taxable income or loss, non-taxable and non-deductible expenses.

	Year Ended September 30,
	2023		2022
Statutory rate	21.0	%	21.0	%
State income taxes	6.0	%	6.0	%
Non-deductible meals and other	1.7	%	10.0	%
Non-deductible PPP Loan interest	*		0.6	%
Effective tax rate	28.7	%	37.6	%

(*Not material)

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, which will result in taxable or deductible amounts in the future. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company had $3.0 million and $10.5 million of federal net operating loss carryforwards at September 30, 2023 and 2022, respectively. The federal net operating loss carryforwards do not expire; however, are limited to 80% of future taxable income. The Company had $23.3 million and $26.4 million of state net operating loss carryforwards at September 30, 2023 and 2022, respectively. The state net operating loss carryforwards begin to expire in 2025.

The income tax effects of temporary differences giving rise to the deferred tax assets and liabilities are as follows:

	Year Ended September 30,
	2023		2022
Deferred tax liabilities
Property and equipment	$	8,141,025	$	7,686,064
Other		588,632		7,632
Total deferred tax liabilities	$	8,729,657	$	7,693,696
Deferred income tax assets
Other	$	948,704	$	404,093
Net operating loss carryforward		910,443		2,834,524
Total deferred tax assets	$	1,859,147	$	3,238,617
Total net deferred tax liabilities	$	6,870,510	$	4,455,079

The Company does not believe that it has any unrecognized tax benefits included in its consolidated financial statements that require recognition. The Company has not had any settlements in the current period with taxing authorities, nor has it recognized tax benefits as a result of a lapse of the applicable statute of limitations. The Company recognizes interest and penalties accrued related to unrecognized tax benefits, if applicable, in general and administrative expenses.