Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v3.7.0.1
Income Taxes
3 Months Ended
Feb. 28, 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 February 28, 2017 and February 29, 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 deferred compensation, charitable contributions and the loss carry forward portion of the deferred tax asset has $121,137, $93,116 and $8,200,805, 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 February 28, 2017. The deferred compensation amount is from the issuance of stock options (see Note 12 - Stock Based Compensation), and will be realized in future years if the options are exercised.

At February 28, 2017 and November 30, 2016, respectively, the Company had temporary differences arising from the following:
 
 
February 28, 2017
 
 
 
 
 
 
Classified As
Type
 
Amount
 
Deferred Tax
 
Short-Term
Asset
 
Long-Term
Asset (Liability)
Depreciation
 
$
(353,530
)
 
$
(128,862
)
 
$

 
$
(128,862
)
Reserve for bad debts
 
5,870

 
2,140

 
2,140

 

Reserve for returns
 
683,463

 
249,122

 
249,122

 

Accrued returns
 
188,033

 
68,538

 
68,538

 

Reserve for obsolete inventory
 
357,539

 
130,323

 
130,323

 

Vacation accrual
 
20,893

 
7,615

 
7,615

 

Alternative minimum tax carry forward
 
 
 
31,000

 
 
 
31,000

Deferred compensation
 
332,337

 
121,137

 
 
 
121,137

Bonus obligation unpaid
 
351,676

 
128,186

 
128,186

 

Restructuring costs
 
595,000

 
216,878

 
216,878

 

Charitable contributions
 
584,558

 
213,071

 
119,955

 
93,116

Section 263A costs
 
72,030

 
26,255

 
26,255

 

Loss carry forward
 
25,789,734

 
9,400,359

 
1,199,554

 
8,200,805

Net deferred tax asset
 
 
 
$
10,465,762

 
$
2,148,566

 
$
8,317,196

 
 
 
 
 
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
 
 
February 29, 2016
February 29, 2016
 
Continuing Operations
 
 
 
Current tax - Federal
$
11,000

$

 
Current tax - State & Local
2,939

2,367

 
Deferred tax
98,701

129,855

 
Tax - Continuing Operations
$
112,640

$
132,222

 
Discontinued Operations
 
 
 
Current tax - Federal


 
Current tax - State & Local


 
Deferred tax

(3,525
)
 
Tax - Discontinued Operations
$

$
(3,525
)
 


Prepaid and refundable income taxes are made up of the following components:
Prepaid and refundable income taxes
 
Federal
 
State &
Local
 
Total
February 28, 2017
 
$

 
$
41,216

 
$
41,216

November 30, 2016
 
$

 
$
44,154

 
$
44,154




Income tax payable is made up of the following components:

Income Taxes Payable
 
Federal
 
State &
Local
 
Total
February 28, 2017
 

 

 

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 ended February 28, 2017, and February 29, 2016 is as follows:

 
 
Three Months Ended
 
Three Months Ended
 
 
February 28, 2017
 
February 29, 2016
 
 
Amount
 
Percent of Pretax Income
 
Amount
 
Percent of Pretax Income
Continuing Operations
 
 
 
 
 
 
 
 
Provision for income taxes at federal statutory rate
 
$
101,793

 
34.00
%
 
$
115,995

 
34.00
%
Changes in provision for income taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 
7,335

 
2.45
%
 
9,894

 
2.90
%
Non-deductible expenses and other adjustments
 
3,512

 
1.17
%
 
6,333

 
1.86
%
Provision for income taxes at effective rate
 
112,640

 
37.62
%
 
132,222

 
38.76
%
Discontinued Operations
 
 
 
 
 
 
 
 
Benefit from income taxes at federal statutory rate
 
$

 
%
 
$
(3,093
)
 
34.00
%
Changes in benefit from income taxes resulting from:
 
 
 
 
 
 
 
 
State income taxes, net of federal income tax benefit
 

 
%
 
(264
)
 
2.90
%
Non-deductible expenses and other adjustments
 

 
%
 
(168
)
 
1.86
%
Benefit from income taxes at effective rate for Discontinued Operations
 
$

 
%
 
$
(3,525
)
 
38.76
%
Total provision for income taxes at effective rate
 
$
112,640

 
37.62
%
 
$
128,697

 
38.76
%