Income Taxes

12 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are the sole managing member of RMR LLC. We are a corporation subject to U.S. federal and state income tax with respect to our allocable share of any taxable income of RMR LLC and its tax consolidated subsidiaries. RMR LLC is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, RMR LLC is generally not subject to U.S. federal and most state income taxes. Any taxable income or loss generated by RMR LLC is passed through to and included in the taxable income or loss of its members, including RMR Inc. and ABP Trust, based on each member’s respective ownership percentage. During the fiscal years ended September 30, 2021, 2020 and 2019, income before taxes was derived solely from domestic operations and amounted to $94,165, $77,885 and $196,364, respectively.

We had a provision for income taxes which consists of the following:

	Fiscal Year Ended September 30,
	2021		2020		2019
Current:
Federal	$	5,820	$	7,138	$	20,020
State	2,103		2,584		7,302
Deferred:
Federal	3,834		1,252		(28)
State	1,395		578		26
Total	$	13,152	$	11,552	$	27,320

A reconciliation of the statutory income tax rate to the effective tax rate is as follows:

	Fiscal Year Ended September 30,
	2021		2020		2019
Income taxes computed at the federal statutory rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	3.1	%	2.9	%	2.9	%
Permanent items	0.6	%	1.0	%	0.1	%
Net income attributable to noncontrolling interest	(10.1)	%	(10.1)	%	(10.1)	%
Other (1)	(0.6)	%	—	%	—	%
Total	14.0	%	14.8	%	13.9	%

(1)     In December 2020, the Internal Revenue Service and Department of Treasury released final regulations which, among other clarifications, established the effective date as it relates to limitations on the deductibility of certain executive compensation. The final regulations provide that the application of the limit applies to deductions after December 18, 2020. As such, during the three months ended December 31, 2020, we reduced our provision for income taxes for limitations applied prior to the effective date by $520, or $0.02 per diluted share.

The components of the deferred tax assets as of September 30, 2021 and 2020 are entirely comprised of the outside basis difference in our partnership interest in RMR LLC.

ASC 740, Income Taxes, provides a model for how a company should recognize, measure and present in its financial statements uncertain tax positions that have been taken or are expected to be taken with respect to all open years and in all significant jurisdictions. Pursuant to this topic, we recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50.0% likely to be realized upon settlement. As of September 30, 2021, 2020 and 2019, we had no uncertain tax positions.