Note 15 - Income Taxes |
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Income Tax Disclosure [Text Block] | 1 5 . Income Taxes The components of the Company’s tax provision for the years ended September 30, 2019 and 2018 are as follows:
The Company’s income tax provision was computed using the federal statutory rate ( 21% ) and average state statutory rates (6.37% ), net of related federal benefit. The provision differs from the amount computed by applying the statutory federal income tax rate to pretax income, as follows:
As of September 30, 2019, the Company has federal net operating loss (NOL) carryforwards of approximately $34 million that expires on various dates through 2039. Internal Revenue Code Section 382 places a limitation on the amount of taxable income which can be offset by NOL carryforwards after a change in control of a loss corporation. Due to these “change of ownership” provisions, utilization of NOL carryforwards may be subject to an annual limitation in future periods. The Company has not performed a Section 382 analysis. However, if performed, Section 382 may be found to limit potential future utilization of the Company’s NOL carryforwards. The Company also has approximately $30 million in state NOLs which expire on various dates through 2038. The Company has deferred tax assets that are available to offset future taxable income. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax assets will not be realized. Management believes that it is more likely than not that all deferred tax assets will not be realized, with the exception of the alternative minimum tax (AMT) carryover which has not been reserved against. Accordingly, the Company has established a valuation allowance against a portion of its deferred tax assets at September 30, 2019 and 2018. For the year ended September 30, 2019, the valuation allowance for deferred tax assets increased by $1.9 million, which was mainly due to increases in the net operating losses. For the year ended September 30, 2018, the valuation allowance for deferred tax assets decreased by $3.5 million, which was mainly due to offsetting increases in the net operating losses and the effect of the change in the federal tax rate to 21%. Significant components of the Company’s deferred tax assets and liabilities are as follows:
Undistributed losses of the Company’s foreign subsidiaries amounted to approximately ( $108 ) and ($59 ) at September 30, 2019 and 2018, respectively.The 2017 Tax Act subjects a U.S. shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income provides that an entity may make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years, or provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. Additionally, the 2017 Tax Act provides for a tax benefit to U.S. taxpayers that sell goods or services to foreign customers under the new Foreign Derived Intangible Income Deduction ("FDII") rules. As of September 30, 2019, the Company had net losses in from all foreign derived income and therefore reported zero GILTI tax expense for the year ended September 30, 2019. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense. Penalties, if incurred, are recognized as a component of tax expense. The Company is subject to U.S. federal income tax as well as income tax in certain state jurisdictions. The Company has not been audited by the Internal Revenue Service (IRS) or any states in connection with income taxes. The tax periods from 2015 to 2018 generally remain open to examination by the IRS and state authorities.When accounting for uncertain income tax positions, the impact of uncertain tax positions is recognized in the financial statements if they are more likely than not of being sustained upon examination, based on the technical merits of the position. The Company’s management has determined that the Company has no September 30, 2019 and 2018. The Company does not expect any change to this determination in the next twelve months. |