Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v3.2.0.727
Income Taxes
6 Months Ended
May. 31, 2015
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 May 31, 2015 and May 31, 2014. 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. There were penalties and related interest of $0 for the six months ended May 31 2015, and $669 for the six months ended May 31 2014. Penalties are recorded in selling, general and administrative expenses.
As of May 31, 2015, the Company had no investments. As of May 31, 2014, the Company had unrealized gain on its investments of $146,552. This amount was reduced by a deferred tax expense of $54,083. The charitable contributions portion of the deferred tax asset and the loss carry forward has $369,420 and $9,589,986, 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 May 31, 2015.

At May 31, 2015 and November 30, 2014, respectively, the Company had temporary differences arising from the following:
 
 
May 31, 2015
 
 
 
 
 
 
Classified As
Type
 
Amount
 
Deferred Tax
 
Short-Term
Asset
 
Long-Term
Asset
Depreciation
 
$
(1,126,276
)
 
$
(415,637
)
 
$

 
$
(415,637
)
Reserve for bad debts
 
9,987

 
3,686

 
3,686

 

Reserve for returns
 
993,137

 
366,504

 
366,504

 

Reserve for obsolete inventory
 
393,240

 
145,120

 
145,120

 

Vacation accrual
 
152,640

 
56,330

 
56,330

 

Accrued bonus
 
222,000

 
81,926

 
81,926

 
 
Charitable contributions
 
1,101,040

 
406,324

 
36,904

 
369,420

Section 263A costs
 
100,482

 
37,082

 
37,082

 

Loss carry forward
 
27,439,271

 
9,959,022

 
369,036

 
9,589,986

Net deferred tax asset (liability)
 
 
 
$
10,640,357

 
$
1,096,588

 
$
9,543,769

 
 
 
 
 
November 30, 2014
 
 
 
 
 
 
Classified As
Type
 
Amount
 
Deferred Tax
 
Short-Term
Asset
 
Long-Term
(Liability)
Depreciation
 
$
(685,154
)
 
$
(252,883
)
 
$

 
$
(252,883
)
Reserve for bad debts
 
25,124

 
9,272

 
9,272

 

Reserve for returns
 
2,942,544

 
1,085,907

 
1,085,907

 

Reserve for obsolete inventory
 
608,504

 
224,560

 
224,560

 

Vacation accrual
 
148,751

 
54,895

 
54,895

 

Charitable contributions
 
1,100,940

 
406,287

 
132,853

 
273,434

Section 263A costs
 
128,079

 
47,266

 
47,266

 

Loss carry forward
 
22,933,333

 
8,296,176

 
1,328,532

 
6,967,644

Net deferred tax asset (liability)
 
 
 
$
9,871,480

 
$
2,883,285

 
$
6,988,195











Income tax (benefit) expense is made up of the following components:

 
Three Months Ended
 
Six Months Ended
 
May 31, 2015
May 31, 2014
 
May 31, 2015
May 31, 2014
Continuing Operations
 
 
 
 
 
Current tax - Federal
$

$

 
$

$

Current tax - State & Local
2,027

2,000

 
4,027

4,000

Deferred tax
(904,500
)
625,426

 
(864,538
)
(96,790
)
Tax - Continuing Operations
$
(902,473
)
$
627,426

 
$
(860,511
)
$
(92,790
)
Discontinued Operations
 
 
 
 
 
Current tax - Federal


 


Current tax - State & Local


 


Deferred tax
96,634

(3,025,225
)
 
95,661

(3,026,802
)
Tax - Discontinued Operations
$
96,634

$
(3,025,225
)
 
$
95,661

$
(3,026,802
)


Prepaid and refundable income taxes are made up of the following components:
Prepaid and refundable income taxes
 
Federal
 
State &
Local
 
Total
May 31, 2015
 
$
167,075

 
$
4,161

 
$
171,236

November 30, 2014
 
$
167,075

 
$
286,523

 
$
453,598



























A reconciliation of the provision for (benefit from) income taxes computed at the statutory rate to the effective rate for the three months ended May 31, 2015, and May 31, 2014 is as follows:

 
 
Three Months Ended
 
Three Months Ended
 
 
May 31, 2015
 
May 31, 2014
 
 
Amount
 
Percent of Pretax Income
 
Amount
 
Percent of Pretax Income
Continuing Operations
 
 
 
 
 
 
 
 
(Benefit from) provision for income taxes at federal statutory rate
 
$
(911,018
)
 
34.00
 %
 
$
581,355

 
34.00
 %
Changes in provision (benefit) for income taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 
(77,704
)
 
2.90
 %
 
49,586

 
2.90
 %
Non-deductible expenses and other adjustments
 
86,249

 
(3.22
)%
 
(3,515
)
 
(0.21
)%
(Benefit from) provision for income taxes at effective rate
 
(902,473
)
 
33.68
 %
 
627,426

 
36.69
 %
Discontinued Operations
 
 
 
 
 
 
 
 
Provision for (benefit from) income taxes at federal statutory rate
 
$
97,549

 
34.00
 %
 
$
(2,803,087
)
 
34.00
 %
Changes in benefit from income taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 
8,320

 
2.90
 %
 
(239,086
)
 
2.90
 %
Non-deductible expenses and other adjustments
 
(9,235
)
 
(3.22
)%
 
16,948

 
(0.21
)%
Provision for (benefit from) income taxes at effective rate for Discontinued Operations
 
$
96,634

 
33.68
 %
 
$
(3,025,225
)
 
36.69
 %
 
 
 
 
 
 
 
 
 
Total benefit from income taxes at effective rate
 
$
(805,839
)
 
33.68
 %
 
$
(2,397,799
)
 
36.69
 %
 
 
 
 
 
 
 
 
 

 
 
Six Months Ended
 
Six Months Ended
 
 
May 31, 2015
 
May 31, 2014
 
 
Amount
 
Percent of Pretax Income
 
Amount
 
Percent of Pretax Income
Continuing Operations
 
 
 
 
 
 
 
 
Benefit from income taxes at statutory rate
 
$
(877,495
)
 
34.00
 %
 
$
(85,919
)
 
34.00
 %
Increases in taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 
(74,845
)
 
2.90
 %
 
(7,328
)
 
2.90
 %
Non-deductible expenses and other adjustments
 
91,829

 
(3.56
)%
 
457

 
(0.18
)%
Benefit from income taxes at effective rate
 
$
(860,511
)
 
33.34
 %
 
(92,790
)
 
36.72
 %
 
 
 
 
 
 
 
 
 
Discontinued Operations
 
 
 
 
 
 
 
 
Provision for (benefit from) income taxes at federal statutory rate
 
$
97,549

 
34.00
 %
 
$
(2,802,674
)
 
34.00
 %
Changes in (benefit) provision for income taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 
8,320

 
2.90
 %
 
(239,052
)
 
2.90
 %
Non-deductible expenses and other adjustments
 
(10,208
)
 
(3.56
)%
 
14,924

 
(0.18
)%
Provision for (benefit from) income taxes at effective rate
 
$
95,661

 
33.34
 %
 
$
(3,026,802
)
 
36.72
 %
 
 
 
 
 
 
 
 
 
Total benefit from income taxes at effective rate
 
$
(764,850
)
 
33.34
 %
 
$
(3,119,592
)
 
36.72
 %