Entity information:
Note
6
– Income Taxes
 
The provision
(benefit) for income taxes for the years ended
September 30, 2017,
2016
and
2015
consists of:
 
   
2017
    
2016
    
2015
  
C
urrent
   $
174,000
     $
22,000
     $
1,114,000
  
D
eferred
    
(320,000
 )    
157,000
      
(341,000
 )
Total provision
(benefit) for income taxes
   $
(146,000
 )   $
179,000
     $
773,000
  
 
The following table summarizes the differences between the U.S. federal statutory rate and the Company
’s effective tax rate for continuing operations financial statement purposes for the years ended
September 30, 2017,
2016
and
2015:
 
   
2017
    
2016
    
2015
  
Statutory tax rate
    
34.0
 %    
34.0
 %    
34.0
 %
State income taxes, net of U.S.
federal tax benefit
    
43.7
 %    
(4.4%
 )    
2.1
 %
Return to accrual adjustment
    
(9.8%
 )    
1.5
 %    
(3.0%
 )
Tax credits
    
8.2
 %    
−
      
(0.9%
 )
Charges without tax benefit
    
(16.2%
 )    
6.8
 %    
1.6
 %
Other
exclusions
    
(0.1%
 )    
(0.1%
 )    
0.2
 %
                         
Company
’s effective tax rate
    
59.8
 %    
37.8
 %    
34.0
 %
 
The charges without tax b
enefit rate for fiscal year
2017
includes, among other things, the impact of officer life insurance and nondeductible meals and entertainment.
 
The tax effects of temporary differences related to deferred taxes
at
September 30, 2017
and
2016
consist of the following:
 
   
2017
    
20
16
  
Deferred tax assets:
                
Net operating loss carryforwards
   $
29,000
     $
281,000
  
Accounts receivable
    
58,000
      
97,000
  
Inventory
    
1,432,000
      
1,269,000
  
Intangibles
    
560,000
      
351,000
  
Accrued expenses
    
175,000
      
169,000
  
Stock options
    
246,000
      
226,000
  
Investment in equity method investee
    
174,000
      
–
  
Other
    
179,000
      
76,000
  
     
2,853,000
      
2,469,000
  
                 
Deferred tax liabilities:
                
Financial basis in excess of tax basis of certain assets
    
1,156,000
      
926,000
  
Investment in equity method investee
    
–
      
143,000
  
Other
    
44,000
      
67,000
  
                 
Net deferred tax asset
   $
1,653,000
     $
1,333,000
  
 
T
he Company’s net operating loss carryforward totals approximately
$0.1
million at
September 30, 2017.  
The net operating loss carryforward expires in
2036.
 
The Company records net deferred tax assets to the extent the Company believes these assets will more likely than
not
be realized.
In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. The Company has concluded, based on its historical earnings and projected future earnings, that it will be able to realize the full effect of the deferred tax assets and
no
valuation allowance is needed.
Based upon a review of its income tax positions, the Company believes that its positions would be sustained upon an examination by the Internal Revenue Service and does
not
anticipate any adjustments that would result in a material change to its financial position. Therefore,
no
reserves for uncertain income tax positions have been recorded. Generally, the Company is
no
longer subject to examinations by the U.S. federal, state or local tax auth
orities for tax years before
2014.