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The total tax provision has been allocated to the following financial statement items: 

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Income tax expense for the years ended September 30, 2000, 1999 and 1998, is different from the amounts computed by applying the U.S. federal income tax rate to income before income taxes. The reasons for these differences are as follows: 

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Foreign taxes are not material. 

Net deferred tax liabilities consist of the following components as of September 30, 2000, 1999 and 1998: 

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The components giving rise to the net deferred tax liabilities described above have been included in the accompanying balance sheets as of September 30, 2000, 1999, and 1998 as follows: 

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The Company provided a valuation allowance due to limita- tions imposed by the tax laws on the Company’s ability to realize the benefit of capital loss and net operating loss carryforwards. During the year ended September 30, 2000, management deter- mined the valuation allowance and tax contingency on the acquired loss carryforward of SJL of Kansas Corp, which was sold on October 1, 2000, should be reduced by $1,155,000 and $1,312,000, respectively, with a corresponding $2,467,000 reduc- tion to goodwill. The remaining net operating loss carryforwards of $11,142,000 were transferred to the acquiror on October 1, 2000. Therefore, the deferred taxes for the net operating loss and the valuation allowance for $4,433,000 have been eliminated. During the years ended September 30, 2000 and 1999, $3,430,000 and $2,146,000, respectively, of the valuation allowance was transferred to the tax contingency which is included in income taxes payable with no effect on tax expense. 

## NOTE 10: 

## Fair Value of Financial Instruments 

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value. 

The carrying amounts of cash and cash equivalents, temporary investments, receivables, and accounts payable approximate fair value because of the short maturity of those instruments. The carrying value of other investments consisting of debt and equity securities in a deferred compensation trust are carried at fair value based upon quoted market prices, and $4,040,000 of equity securi- ties, consisting primarily of the Company’s 17% ownership of the nonvoting common stock of The Capital Times Company, which are carried at cost, as the fair value is not readily determinable. The remaining $2,194,000 is an investment in debt and equity securities of Ad One, LLC (a 6.3% interest) which is being accounted for similar to the equity method. 

The fair value of the Company’s debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The estimated fair values of the Company’s debt instruments are as follows: 

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