Income Tax |
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| Income Tax |
14. Income Tax
The following table presents the provision for income taxes and our effective tax rate for the three and six-month periods ended March 31, 2026 and 2025:
The effective income tax rate on operations is based upon the estimated income for the year, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies. The effective tax rates for the three and six months ended March 31, 2026 and March 31, 2025 differ from the statutory rate primarily due to the effect of the change in the valuation allowance on the Company’s net deferred tax asset position along with the sensitivity due to the lower pre-tax book income present in both the three and six-months ended March 31,2026. For the three and six months ended March 31, 2026, the Company recognized an income tax benefit of $21.
As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets (“DTAs”). In view of the significance of the Company’s recent pre-tax book losses, and possibility of continuing uncertainty in the industry and economy as a whole, management reduced projections of future income and the reversal of its DTAs as of September 30, 2025. As a result, it was determined that the Company's net DTAs would not be realized as there is not sufficient positive evidence to conclude that it is more likely than not that the net deferred tax assets are realizable. The Company holds a full valuation allowance of $12,686 and $12,757 as of March 31, 2026 and September 30, 2025, accordingly. The One Big Beautiful Bill of 2025
On July 4, 2025, H.R.1 - One Big Beautiful Bill was enacted, introducing a wide range of tax reforms for businesses. Due to the Company's loss position and limited exposure to affected provisions, the bill’s overall impact is not material. The Company has historically elected out of bonus depreciation for all classes of property under Section 168(k)(7) and depreciates assets under MACRS without accelerated expensing. The Company continues to monitor ongoing regulatory guidance related to the new law. |
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