Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v2.4.0.8
Income Taxes
3 Months Ended
Feb. 28, 2013
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, 2013 and May 31, 2012. 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 $586 for the fiscal year to date ended May 31, 2013, and $6,661 for penalties and interest for the the fiscal year to date ended May 31, 2012.
As of May 31, 2013, the Company had unrealized gain on its investments of $193,114. This amount was reduced by a deferred tax expense of $71,266, of which a $20,616 expense was recorded in prior fiscal years. The deferred tax expense for the six months ended May 31, 2013 has been recorded as part of the deferred tax asset, and offset against the unrealized gains on marketable securities reported on the consolidated balance sheet. The charitable contributions portion of the deferred tax asset has $292,025 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, 2013.

At May 31, 2013 and November 30, 2012, respectively, the Company had temporary differences arising from the following:
 
 
May 31, 2013
 
 
 
 
 
 
Classified As
Type
 
Amount
 
Deferred Tax
 
Short-Term
Asset
 
Long-Term
(Liability)
Depreciation
 
$
(968,029
)
 
$
(357,238
)
 
$

 
$
(357,238
)
Unrealized (gain) on investments
 
(193,114
)
 
(71,266
)
 
(71,266
)
 

Reserve for bad debts
 
26,512

 
9,784

 
9,784

 

Reserve for returns
 
1,901,663

 
701,783

 
701,783

 

Reserve for obsolete inventory
 
531,576

 
196,171

 
196,171

 

Vacation accrual
 
319,669

 
117,970

 
117,970

 

Charitable contributions
 
818,318

 
301,989

 
9,964

 
292,025

Section 263A costs
 
313,076

 
115,536

 
115,536

 

Loss carry forward
 
1,789,024

 
660,215

 
660,215

 

Net deferred tax asset (liability)
 
 
 
$
1,674,944

 
$
1,740,157

 
$
(65,213
)
 
 
 
 
 
November 30, 2012
 
 
 
 
 
 
Classified As
Type
 
Amount
 
Deferred Tax
 
Short-Term
Asset
 
Long-Term
(Liability)
Depreciation
 
$
(1,028,273
)
 
$
(379,470
)
 
$

 
$
(379,470
)
Unrealized (gain) on investments
 
(55,863
)
 
(20,616
)
 
(20,616
)
 

Reserve for bad debts
 
26,340

 
9,721

 
9,721

 

Reserve for returns
 
1,772,405

 
654,083

 
654,083

 

Reserve for obsolete inventory
 
671,609

 
247,849

 
247,849

 

Vacation accrual
 
323,470

 
119,372

 
119,372

 

Charitable contributions
 
722,555

 
266,649

 
126,852

 
139,797

Section 263A costs
 
285,129

 
105,223

 
105,223

 

Net deferred tax asset (liability)
 
 
 
$
1,002,811

 
$
1,242,484

 
$
(239,673
)



Income tax (benefit) expense is made up of the following components:
 
 
Three Months Ended
Six Months Ended
 
 
May 31, 2013
 
May 31, 2012
May 31, 2013
 
May 31, 2012
Current tax - Federal
 
$

 
$
180,130

$

 
$
191,618

Current tax - State & Local
 
22,559

 
57,071

23,111

 
60,540

Deferred tax (benefit) expense
 
(64,501
)
 
(37,548
)
(722,783
)
 
14,407

Total tax (benefit) expense
 
$
(41,942
)
 
$
199,653

$
(699,672
)
 
$
266,565


Prepaid and refundable income taxes are made up of the following components:
Prepaid and refundable income taxes
 
Federal
 
State &
Local
 
Total
May 31, 2013
 
$
231,168

 
$
520,209

 
$
751,377

November 30, 2012
 
$
377,292

 
$
367,885

 
$
745,177


Income tax payable is made up of the following components:
Income Taxes Payable
 
Federal
 
State &
Local
 
Total
May 31, 2013
 
$

 
$

 
$

November 30, 2012
 
$

 
$
9,440

 
$
9,440



A reconciliation of the (benefit) provision for income taxes computed at the statutory rate to the effective rate for the three months ended May 31, 2013 and May 31, 2012 is as follows:
 
 
 
Three Months Ended
 
Three Months Ended
 
 
May 31, 2013
 
May 31, 2012
 
 
Amount
 
Percent of Pretax Income
 
Amount
 
Percent of Pretax Income
(Benefit) provision for income taxes at federal statutory rate
 
$
(67,585
)
 
34.00
 %
 
$
170,596

 
34.00
 %
Increases in taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 
(5,765
)
 
2.90
 %
 
32,112

 
6.40
 %
Non-deductible expenses and other adjustments
 
31,408

 
(15.80
)%
 
(3,055
)
 
(0.61
)%
(Benefit) provision for income taxes at effective rate
 
$
(41,942
)
 
21.10
 %
 
$
199,653

 
39.79
 %
 
 
 
 
 
 
 
 
 









A reconciliation of the (benefit) provision for income taxes computed at the statutory rate to the effective rate for the six months ended May 31, 2013 and May 31, 2012 is as follows:

 
 
Six Months Ended
 
Six Months Ended
 
 
May 31, 2013
 
May 31, 2012
 
 
Amount
 
Percent of Pretax Income
 
Amount
 
Percent of Pretax Income
(Benefit) provision for income taxes at federal statutory rate
 
$
(636,445
)
 
34.00
%
 
$
223,107

 
34.00
%
Increases in taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 
(54,285
)
 
2.90
%
 
41,997

 
6.40
%
Non-deductible expenses and other adjustments
 
(8,942
)
 
0.48
%
 
1,461

 
0.22
%
(Benefit) provision for income taxes at effective rate
 
$
(699,672
)
 
37.38
%
 
$
266,565

 
40.62
%