Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v3.8.0.1
Income Taxes
9 Months Ended
Aug. 31, 2017
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES

CCA and its subsidiaries file a consolidated federal income tax return.
The Company previously adopted the provisions of ASC Subtopic 740-10-25, “Uncertain Tax Positions”. Management believes that there were no unrecognized tax benefits, or tax positions that would result in uncertainty regarding the deductions taken, as of August 31, 2017 and August 31, 2016. ASC Subtopic 740-10-25 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.
The charitable contributions portion of the deferred tax asset and the loss carry forward has $30,725 and $7,981,743, respectively, that has been reclassified as a long-term asset, based on an estimate of the amount that will be realizable in periods greater than twelve months from August 31, 2017.
At August 31, 2017 and November 30, 2016, respectively, the Company had temporary differences arising from the following:
 
 
August 31, 2017
 
 
 
 
 
 
Classified As
Type
 
Amount
 
Deferred Tax
 
Short-Term
Asset
 
Long-Term
Asset (Liability)
Depreciation
 
$
(368,265
)
 
$
(134,232
)
 
$

 
$
(134,232
)
Reserve for bad debts
 
9,958

 
3,630

 
3,630

 

Reserve for returns
 
125,287

 
45,667

 
45,667

 

Accrued returns
 
119,533

 
43,570

 
43,570

 

Reserve for obsolete inventory
 
112,834

 
41,128

 
41,128

 

Vacation accrual
 
49,892

 
18,186

 
18,186

 

Alternative minimum tax carry forward
 

 
79,875

 
 
 
79,875

Deferred Compensation
 
446,803

 
162,860

 
 
 
162,860

Bonus obligation unpaid
 
480,518

 
175,149

 
175,149

 

Charitable contributions
 
403,263

 
146,990

 
116,265

 
30,725

Section 263A costs
 
55,976

 
20,403

 
20,403

 

Loss carry forward
 
25,087,498

 
9,144,391

 
1,162,648

 
7,981,743

Net deferred tax asset
 
 
 
$
9,747,617

 
$
1,626,646

 
$
8,120,971

 
 
 
 
 
November 30, 2016
 
 
 
 
 
 
Classified As
Type
 
Amount
 
Deferred Tax
 
Short-Term
Asset
 
Long-Term
Asset (Liability)
Depreciation
 
$
(349,763
)
 
$
(127,489
)
 
$

 
$
(127,489
)
Reserve for bad debts
 
15,801

 
5,759

 
5,759

 

Reserve for returns
 
941,228

 
343,078

 
343,078

 

Accrued Returns
 
194,873

 
71,031

 
71,031

 

Reserve for obsolete inventory
 
500,156

 
182,307

 
182,307

 

Vacation accrual
 
29,528

 
10,763

 
10,763

 

Alternative minimum tax carry forward
 

 
20,000

 
 
 
20,000

Deferred compensation
 
304,945

 
111,153

 
 
 
111,153

Bonus obligation unpaid
 
304,355

 
110,937

 
110,937

 

Restructuring costs
 
925,000

 
337,163

 
337,163

 

Charitable contributions
 
584,558

 
213,071

 
96,249

 
116,822

Section 263A costs
 
79,539

 
28,992

 
28,992

 

Loss carry forward
 
25,398,347

 
9,257,698

 
962,485

 
8,295,213

Net deferred tax asset
 
 
 
$
10,564,463

 
$
2,148,764

 
$
8,415,699














Income tax expense (benefit) is made up of the following components:
 
Three Months Ended
 
Nine Months Ended
 
August 31, 2017
August 31, 2016
 
August 31, 2017
August 31, 2016
Continuing Operations
 
 
 
 
 
Current tax - Federal
$
43,875

$

 
$
59,875

$

Current tax - State & Local
312

16,365

 
6,189

21,100

Deferred tax
310,629

178,661

 
816,846

553,189

Tax - Continuing Operations
$
354,816

$
195,026

 
$
882,910

$
574,289

Discontinued Operations
 
 
 
 
 
Current tax - Federal


 


Current tax - State & Local


 


Deferred tax


 

(7,704
)
Tax - Discontinued Operations
$

$

 
$

$
(7,704
)


Prepaid and refundable income taxes are made up of the following components:
Prepaid and refundable income taxes
 
Federal
 
State &
Local
 
Total
August 31, 2017
 
$
26,707

 
$
39,813

 
$
66,520

November 30, 2016
 
$

 
$
44,154

 
$
44,154



Income taxes payable are made up of the following components:
Income Taxes Payable
 
Federal
 
State &
Local
 
Total
November 30, 2016
 
$
20,000

 
$

 
$
20,000

















A reconciliation of the provision for income taxes computed at the statutory rate to the effective rate for the three months and nine months ended August 31, 2017, and August 31, 2016 is as follows:

 
 
Three Months Ended
 
Three Months Ended
 
 
August 31, 2017
 
August 31, 2016
 
 
Amount
 
Percent of Pretax Income
 
Amount
 
Percent of Pretax Income
Continuing Operations
 
 
 
 
 
 
 
 
Provision for income taxes at federal statutory rate
 
$
249,050

 
34.00
%
 
$
175,574

 
34.00
%
Changes in provision for income taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 
21,242

 
2.90
%
 
14,975

 
2.90
%
Non-deductible expenses and other adjustments
 
84,524

 
11.54
%
 
4,477

 
0.87
%
Provision for income taxes at effective rate
 
354,816

 
48.44
%
 
195,026

 
37.77
%
Discontinued Operations
 
 
 
 
 
 
 
 
(Benefit from) income taxes at federal statutory rate
 

 
%
 

 
%
Changes in benefit from income taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 

 
%
 

 
%
Non-deductible expenses and other adjustments
 

 
%
 

 
%
(Benefit from) income taxes at effective rate for Discontinued Operations
 

 
%
 

 
%
Total provision for income taxes at effective rate
 
$
354,816

 
48.44
%
 
$
195,026

 
37.77
%























 
 
Nine Months Ended
 
Nine Months Ended
 
 
August 31, 2017
 
August 31, 2016
 
 
Amount
 
Percent of Pretax Income
 
Amount
 
Percent of Pretax Income
Continuing Operations
 


 


 


 


Provision for income taxes at federal statutory rate
 
$
729,604

 
34.00
%
 
$
522,105

 
34.00
%
Increases in taxes resulting from:
 

 


 

 


State income taxes, net of federal income tax benefit
 
62,231

 
2.90
%
 
44,533

 
2.90
%
Non-deductible expenses and other adjustments
 
91,075

 
4.24
%
 
7,651

 
0.50
%
Provision for income taxes at effective rate
 
882,910

 
41.14
%
 
574,289

 
37.40
%
 
 

 

 

 

Discontinued Operations
 

 

 

 

(Benefit from) provision for income taxes at federal statutory rate
 

 
%
 
(7,004
)
 
34.00
%
Changes in (benefit from) provision for income taxes resulting from:
 

 


 

 

State income taxes, net of federal income tax benefit
 

 
%
 

 
%
Non-deductible expenses and other adjustments
 

 
%
 
(700
)
 
3.40
%
(Benefit from) income taxes at effective rate
 

 
%
 
(7,704
)
 
37.40
%
 
 

 

 

 

Total Provision for income taxes at effective rate
 
$
882,910

 
41.14
%
 
$
566,585

 
37.40
%