Note 9 - Income Taxes

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

9

- Income Taxes

Taxes

For the

nine

months ended

June 30, 2017,

the Company recorded an income tax benefit of

$6,015,000

on pretax loss of

$5,858,000.

The Company had an

accrued liability of approximately

$2,655,000

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

2013.

During the

second

quarter of fiscal

2017,

the Internal Revenue Service concluded its examination of the Company’s fiscal

2014

income tax return and proposed

no

changes to the tax position that gave rise to this liability. Consequently, this liability was reversed in

March 2017

along with the related accrued interest and penalty expenses of

$743,000.

In addition, a deferred tax liability, in the amount of

$352,000,

relating to temporary differences that would only exist if the uncertain tax position was never recognized, was reversed.

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

2017

to pretax loss for the

nine

-month period ended

June 30, 2017.

The effective tax rate (before the discrete item discussed above) was greater than the statutory rate primarily due to the dividends received deduction which increases the loss for tax purposes.  On pretax loss of

$606,000

for the

nine

months ended

June 30, 2016,

the Company recorded an income tax benefit of

$525,000

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

2016

to pretax loss for the

nine

months ended

June 30, 2016.

The Company’s effective tax rate was

103%

and

87%

for the

nine

months ended

June 30, 2017

and

2016,

respectively. 

The Company files consolidated 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

2015

with regard to federal income taxes and fiscal

2013

for state income taxes.