Note 8 - Income Taxes

3 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

8

- Income Taxes

Taxes

For the

three

months ended

December

31,

2016,

the Company recorded an income tax benefit of

$310,000

on pretax loss of

$1,781,000.

The income tax benefit was the result of applying the effective tax rate anticipated for fiscal

2017

to pretax loss for the

three

-month period ended

December

31,

2016.

The effective tax rate was lower than the statutory rate primarily due to the dividends received deduction.  On pretax loss of

$135,000

for the

three

months ended

December

31,

2015,

the Company recorded an income tax benefit of

$185,000

which was the net result of applying the effective tax rate anticipated for fiscal

2016

to pretax loss for the

three

months ended

December

31,

2015.

The Company’s effective tax rate was

17%

and

137%

for the

three

months ended

December

31,

2016

and

2015,

respectively. 

At

December

31,

2016,

the Company had an

accrued liability of approximately

$2,655,000

for uncertain and unrecognized tax benefits relating to an acquisition in fiscal

2013,

after a reduction of

$589,000

resulting from the recognition of deferred revenues and from the amortization of goodwill for tax purposes.   The Internal Revenue Service is currently conducting an examination of the Company’s fiscal

2014

income tax return. The examination is still in progress, and the results are unknown at this time. During the

three

-month periods ended

December

31,

2016

and

2015,

interest expenses of approximately

$9,000

and

$24,000,

respectively, were recorded as “interest expense accrued for uncertain and unrecognized tax benefits” in the Consolidated Statements of Comprehensive Income. The Company files federal income tax returns in the United States and with various state jurisdictions and is no longer subject to examinations for fiscal years before fiscal

2014

with regard to federal income taxes and fiscal

2013

for state income taxes.