Income Taxes

12 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Income Taxes

(6) Income Taxes

Income tax expense for the years ended September 30 is as follows:

	2012			2011			2010
Current	($	1,233,575	)	($	54,139	)	$	1,114,034
Deferred		1,679,909			284,173			(140,722	)
Total	$	446,334		$	230,034		$	973,312

Actual income tax expense differs from the expected tax expense (computed by applying the federal corporate tax rate of 34% and state tax rate of 7.1% to income before income tax expense) as follows:

	2012			2011			2010
Expected federal tax expense	$	530,299		$	536,813		$	889,078
State tax expense (net of federal)		110,739			112,099			185,660
Net operating loss carryforwards		(137,519	)		(468,755	)		(2,783	)
Other, net		(57,185	)		49,877			(98,643	)
Actual tax expense	$	446,334		$	230,034		$	973,312

Our effective tax rate for the period ending September 30, 2012 was 24.8% instead of the expected rate of 41.1% (34% federal provision and 7.1% New York State provision) due mainly to bonus depreciation and accounting for a contribution in aid of construction on one of our major projects. Our effective tax rate for the period ending September 30, 2011 was 14.6% instead of the expected rate of 41.1% (34% federal provision and 7.1% New York State provision) due mainly to bonus depreciation on the Compressor Station, an asset not on the Company’s Balance Sheet due to regulatory accounting (see Note (q) 311 Transportation Agreement/Compressor Station for more information). Our effective tax rate for the period ending September 30, 2010 was 37.2% instead of the expected rate of 41.1% (34% federal provision and 7.1% New York State provision) due to bonus depreciation and the adjustment back to a 34% federal provision for the prior fiscal year. Taxes paid have also been affected by the amount of net operating loss (NOL) carryforward on both federal and state returns and have positively affected our effective tax.

The tax effects of temporary differences that result in deferred income tax assets and liabilities at September 30 are as follows:

	2012			2011			2010
Deferred income tax assets:
Unbilled revenue	$	36,637		$	—		$	42,187
Deferred compensation reserve		554,728			810,617			900,339
Post-retirement benefit obligations		439,234			317,329			339,462
Comprehensive income		2,528,780			2,367,781			2,473,850
Inventories		45,308			—			—
Estimated tax payments		68,242			1,332,039			26,888
Prior period tax reconciliations (1)(2)(3)		227,971			687,570			468,078
Other		1,715,363			855,783			603,756
Total deferred income tax assets		5,616,263			6,371,119			4,854,560
Deferred income tax liabilities:
Property, plant and equipment, principally due to
differences in depreciation		1,418,210			2,591,119			2,561,750
Pension benefit obligations		1,659,791			1,290,001			1,057,256
Unbilled revenue		—			39,893			—
Inventories		—			60,795			64,277
Deferred rate expense and allocations		663,673			583,994			645,196
Deficiency of gas adjustment clause revenues billed		397,687			236,923			373,905
Other		371,957			407,875			542,465
Total deferred income tax liabilities		4,511,318			5,210,600			5,244,849
Net deferred income tax (assets) liabilities	($	1,104,945	)	($	1,160,519	)	$	390,289

(1) In 2010, this amount is the total of $601,407 for tax depreciation less $133,329 for deferred taxes from prior period reconciliation.

(2) In 2011, this amount is the total of $224,073 for tax depreciation less $5,258 for deferred taxes plus $468,755 for prior period accrued income taxes.

(3) In 2012, this amount is the total of $652,404 for tax depreciation less $561,952 for deferred taxes plus $137,519 for prior period accrued income taxes

The Company has federal tax net operating loss carry forwards available of approximately $12 million as of September 30, 2012 that begin to expire at the end of 2019.

FASB ASC No. 740 - Income Taxes provides for the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recognized in the financial statements. The Company has evaluated its tax positions and accordingly has not identified any significant uncertain tax positions. The Company’s policy is to classify interest associated with uncertain tax positions as interest expense in the financial statements. Penalties are classified under other expense. The Company files a consolidated federal income tax return and state income tax returns in New York. Starting with the tax year ended September 30, 2012, the Company will also be filing a state income tax return in Pennsylvania . The federal returns and the state returns for the tax years ended prior to September 30, 2009 are no longer subject toexamination.