Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.25.3
Income Taxes
 12 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
Note 9. Income Taxes
The Federal and State filings remain subject to examination by tax authorities for tax periods ending after September 30, 2022 and 2021, respectively.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law, which includes a broad range of tax reform provisions that may affect the Company's financial results. The OBBBA allows for the addback of tax depreciation and amortization when computing interest limitations under Section 163(j) of the U.S. Internal Revenue Code of 1986, as amended, a reinstatement of elective 100% first-year bonus depreciation for qualified property acquired after January 19, 2025, and a more favorable tax rate on Foreign-derived Deduction Eligible Income and income from non-U.S. subsidiaries (Net CFC Tested Income), among other provisions. The Company has evaluated the impact of these provisions and noted an immaterial impact to fiscal year 2025. However, the Company is still currently evaluating the impact of these provisions which could affect the Company’s effective tax rate and deferred tax assets in future periods. A quantitative estimate of the specific financial effects cannot be reasonably determined at this time due to the complexity of the changes in the tax reform. The impact of those tax provisions in the OBBBA will depend on our facts in each year and anticipated guidance from the U.S. Department of the Treasury.
The income tax (benefit) provision for the years ended September 30, 2025 and 2024 consists of the following:
(in thousands) Years Ended September 30,
2025 2024
Current:
Federal $ (1) $ 99 
State (3) 34 
Total current (4) 133 
Deferred:
Federal (37,327) 2,260 
State (9,428) 616 
Valuation allowance 8,336  1,588 
Total deferred (38,419) 4,464 
Income tax (benefit) provision $ (38,423) $ 4,597 
Income tax (benefit) provision attributable to income before income taxes differed from the amount computed by applying the statutory federal income tax rate of 21% to (loss) income before income taxes for each of the years ended September 30, 2025 and September 30, 2024, respectively, as a result of the following:
(in thousands) Years Ended September 30,
2025 2024
Amount Tax Rate Amount Tax Rate
Income tax (benefit) provision at the statutory federal rate $ (39,018) 21.0 % $ 2,300  21.0 %
Increase (decrease) resulting from:
State income taxes, net of federal benefit (8,010) 4.3 % 514  4.7 %
Permanent reconciling items, net 196  (0.1 %) 13  0.1 %
Officer life insurance 11  — % (16) (0.1 %)
Non-Controlling Interest - Citree 37  — % 130  1.2 %
Valuation allowance 8,336  (4.6 %) 1,588  14.5 %
Other 25  — % 68  0.6 %
Income tax (benefit) provision $ (38,423) 20.6 % $ 4,597  42.0 %
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of September 30, 2025, and 2024 are presented below:
(in thousands) September 30,
2025 2024
Deferred tax assets:
Goodwill $ 7,141  $ 8,986 
Inventories 235  194 
Stock compensation 161  190 
Accrued bonus 195  145 
Intangibles 232  288 
Charitable contribution carryforward 5,804  5,800 
Net operating loss 11,377  4,576 
Interest expense limitation 2,681  1,605 
Other 34  115 
Total deferred tax assets 27,860  21,899 
Deferred tax liabilities:
Property and equipment 15,117  55,954 
Investment in Citree 907  846 
Prepaid insurance 197  215 
Total deferred tax liabilities 16,221  57,015 
Valuation allowance 14,094  5,757 
Net deferred income tax liabilities $ (2,455) $ (40,873)

The Company has a federal net operating loss carryforward of $45,362 and state net operating loss carryforward of $42,631 at September 30, 2025, which resulted in deferred tax assets of $9,526 and $1,852, respectively. Both the federal and state net operating losses have an indefinite life.
The Company has a partial valuation allowance on both our charitable contribution carryforward balance and federal and state tax loss carryforward balances as of September 30, 2025 and a partial valuation allowance on our charitable contribution carryforward balance at September 30, 2024. The valuation allowance at September 30, 2025 and 2024 was $14,094 and $5,757, respectively.