Income Taxes |
3 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes
The Company calculates income tax expense based upon an annual effective tax rate forecast, including estimates and assumptions. The Company recorded an income tax benefit of approximately $(109) and zero for the three months ended December 31, 2021 and 2020, respectively. The tax benefit is driven mainly by the “naked credit” (refer below for more information).
The Company has not recorded tax benefits on the loss before income taxes due to a full valuation allowance that offsets potential deferred tax assets resulting from net operating loss carry forwards, reflecting the inability to demonstrate the realizability of such loss carry forwards.
The effective tax rate for the three months ended December 31, 2021 and 2020 was negative 11.9% and zero, respectively.
As of December 31, 2021, the Company has a net deferred tax liability, due to what is referred to as a “naked credit.” The naked credit exists when a deferred tax liability can only be offset up to 80% by NOLs generated in tax years ending September 30, 2019 and beyond, as well as NOLs available after consideration of IRC Section 382 limitation. The remaining portion that cannot be used remains as a liability. In future years, if the deferred tax assets are determined by management to be “more likely than not” to be realized, the recognized tax benefits relating to the reversal of the valuation allowance as of December 31, 2021 will be recorded. The Company will continue to assess and evaluate strategies that will enable the deferred tax asset, or portion thereof, to be utilized, and will reduce the valuation allowance appropriately as such time when it is determined that the “more likely than not” criteria is satisfied.
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