Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v3.7.0.1
Income Taxes
6 Months Ended
May 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 May 31, 2017 and May 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 $84,306 and $7,982,555, 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, 2017.
At May 31, 2017 and November 30, 2016, respectively, the Company had temporary differences arising from the following:
 
 
May 31, 2017
 
 
 
 
 
 
Classified As
Type
 
Amount
 
Deferred Tax
 
Short-Term
Asset
 
Long-Term
Asset (Liability)
Depreciation
 
$
(355,424
)
 
$
(129,552
)
 
$

 
$
(129,552
)
Reserve for bad debts
 
5,146

 
1,876

 
1,876

 

Reserve for returns
 
409,118

 
149,124

 
149,124

 

Accrued returns
 
219,307

 
79,937

 
79,937

 

Reserve for obsolete inventory
 
120,981

 
44,098

 
44,098

 

Vacation accrual
 
27,243

 
9,930

 
9,930

 

Alternative minimum tax carry forward
 

 
36,000

 
 
 
36,000

Deferred Compensation
 
383,416

 
139,755

 
 
 
139,755

Bonus obligation unpaid
 
482,945

 
176,033

 
176,033

 

Restructuring costs
 
505,000

 
184,073

 
184,073

 

Charitable contributions
 
550,267

 
200,571

 
116,265

 
84,306

Section 263A costs
 
74,656

 
27,212

 
27,212

 

Loss carry forward
 
25,089,724

 
9,145,204

 
1,162,649

 
7,982,555

Net deferred tax asset
 
 
 
$
10,064,261

 
$
1,951,197

 
$
8,113,064

 
 
 
 
 
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
 
Six Months Ended
 
May 31, 2017
May 31, 2016
 
May 31, 2017
May 31, 2016
Continuing Operations
 
 
 
 
 
Current tax - Federal
$
5,000

$

 
$
16,000

$

Current tax - State & Local
2,938

2,369

 
5,877

4,735

Deferred tax
407,516

244,685

 
506,217

374,489

Tax - Continuing Operations
$
415,454

$
247,054

 
$
528,094

$
379,224

Discontinued Operations
 
 
 
 
 
Current tax - Federal


 


Current tax - State & Local


 


Deferred tax

(4,192
)
 

(7,665
)
Tax - Discontinued Operations
$

$
(4,192
)
 
$

$
(7,665
)


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

 
$
38,277

 
$
38,277

November 30, 2016
 
$

 
$
44,154

 
$
44,154



Income taxes payable are made up of the following components:
Income Taxes Payable
 
Federal
 
State &
Local
 
Total
May 31, 2017
 
$
1,000

 
$

 
$
1,000

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 May 31, 2017, and May 31, 2016 is as follows:

 
 
Three Months Ended
 
Three Months Ended
 
 
May 31, 2017
 
May 31, 2016
 
 
Amount
 
Percent of Pretax Income
 
Amount
 
Percent of Pretax Income
Continuing Operations
 
 
 
 
 
 
 
 
Provision for income taxes at federal statutory rate
 
$
378,761

 
34.00
%
 
$
230,535

 
34.00
 %
Changes in provision for income taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 
32,306

 
2.90
%
 
19,663

 
2.90
 %
Non-deductible expenses and other adjustments
 
4,387

 
0.39
%
 
(3,144
)
 
(0.46
)%
Provision for income taxes at effective rate
 
415,454

 
37.29
%
 
247,054

 
36.44
 %
Discontinued Operations
 
 
 
 
 
 
 
 
(Benefit from) income taxes at federal statutory rate
 

 
%
 
(3,911
)
 
34.00
 %
Changes in benefit from income taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 

 
%
 
(334
)
 
2.90
 %
Non-deductible expenses and other adjustments
 

 
%
 
53

 
(0.46
)%
(Benefit from) income taxes at effective rate for Discontinued Operations
 

 
%
 
(4,192
)
 
36.44
 %
Total provision for income taxes at effective rate
 
$
415,454

 
37.29
%
 
$
242,862

 
36.44
 %



Six Months Ended

Six Months Ended


May 31, 2017

May 31, 2016


Amount

Percent of Pretax Income

Amount

Percent of Pretax Income
Continuing Operations












Provision for (benefit from) income taxes at federal statutory rate

$
480,554


34.00
%

$
346,532


34.00
%
Increases in taxes resulting from:










State income taxes, net of federal income tax benefit

40,988


2.90
%

29,557

 
2.90
%
Non-deductible expenses and other adjustments

6,552


0.46
%

3,135


0.31
%
Provision for (benefit from) income taxes at effective rate

528,094


37.36
%

379,224


37.21
%









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



%

(661
)

3.21
%
(Benefit from) provision for income taxes at effective rate



%

(7,665
)

37.21
%









Total Provision for (benefit from) income taxes at effective rate

$
528,094


37.36
%

$
371,559


37.21
%