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Income Taxes | 12 Months Ended
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Jan. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The income tax expense for the last two years is reconciled to the statutory federal income tax rates of 21% for the tax years ended January 31, 2020 and 2019, respectively, as follows (in thousands):
| 2020 |  | 2019
Statutory | $ | 585 |  |  | $ | (235 | )
State taxes (net of federal tax) | 400 |  |  | 186 |
Change in valuation allowance | (573 | ) |  | 831 |
State rate adjustment | (291 | ) |  | (222 | )
Change in unrecognized tax benefits | 20 |  |  | 1 |
Stock Compensation | (28 | ) |  | (46 | )
Tax cuts and jobs act | — |  |  | (15 | )
Expirations of attributes | 345 |  |  | 28 |
Permanent differences | (17 | ) |  | 8 |
Return to provision | (96 | ) |  | (39 | )
Income tax expense | $ | 345 |  |  | $ | 497 |
Significant components of the expense for income taxes attributed to continuing operations are as follows for the years ended January 31 (in thousands):
| 2020 |  | 2019
Current |  |  |
Federal | $ | — |  |  | $ | (24 | )
State | 136 |  |  | 102 |
| 136 |  |  | 78 |
Deferred |  |  |
Federal | 442 |  |  | (247 | )
State | 340 |  |  | (165 | )
| 782 |  |  | (412 | )
Change in valuation allowance | (573 | ) |  | 831 |
| 209 |  |  | 419 |
Income tax expense | $ | 345 |  |  | $ | 497 |
Deferred tax assets and liabilities are comprised of the following as of January 31 (in thousands):
| 2020 |  | 2019
Deferred tax assets |  |  |
Accrued vacation and sick leave | $ | 1,264 |  |  | $ | 892 |
Retirement plans | 5,448 |  |  | 2,748 |
Insurance reserves | 443 |  |  | 381 |
Warranty | 207 |  |  | 182 |
Net operating loss carryforwards | 3,658 |  |  | 5,303 |
Right of use liabilities | 6,067 |  |  | — |
Inventory | 1,175 |  |  | 1,320 |
Business interest expense limitation | 224 |  |  | 540 |
Other | 301 |  |  | 765 |
| $ | 18,787 |  |  | $ | 12,131 |
Deferred tax liabilities |  |  |
Tax in excess of book depreciation | $ | (802 | ) |  | $ | (720 | )
Right of use assets | (5,519 | ) |  | — |
Other | (53 | ) |  | (57 | )
| $ | (6,374 | ) |  | $ | (777 | )
Valuation allowance | (1,183 | ) |  | (1,756 | )
Net long term deferred tax asset | $ | 11,230 |  |  | $ | 9,598 |
In assessing the realizability of deferred tax assets, the Company considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income or reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company has a valuation allowance of $1,183,000 against certain state deferred tax assets that the Company does not believe it is more-likely-than-not to realize. At January 31, 2020, the Company has net operating loss carryforwards of approximately $9,499,000 for federal and $26,098,000 for state income tax purposes, expiring at various dates through January 31, 2039. The following table summarizes the activity related to our gross unrecognized tax benefits for the years ended January 31 (in thousands):
| 2020 |  | 2019
Balances as of February 1, | $ | 38 |  |  | $ | 38 |
Increases related to prior year tax positions | 8 |  |  | — |
Decreases related to prior year tax positions | — |  |  | (2 | )
Increases related to current year tax positions | 18 |  |  | 8 |
Decreases relating to settlements with taxing authorities | — |  |  | — |
Decreases related to lapsing of statute of limitations | (4 | ) |  | (6 | )
Balance as of January 31, | $ | 60 |  |  | $ | 38 |
At January 31, 2020, the Company’s unrecognized tax benefits associated with uncertain tax positions were $60,000, of which $47,000 if recognized, would favorably affect the effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense which is consistent with the recognition of the items in prior reporting. The Company had recorded a liability for interest and penalties related to unrecognized tax benefits of $10,000 at January 31, 2020, and $6,000 at January 31, 2019. The years ended January 31, 2016 and subsequent years remain open for examination by the IRS and state tax authorities. The Company is currently under IRS examination for fiscal year ended January 31, 2016. The Company is not currently under state examinations. The specific timing of when the resolution of each tax position will be reached is uncertain. As of January 31, 2020, it is reasonably possible that unrecognized tax benefits will decrease by $5,000 within the next 12 months due to the expiration of the statute of limitations. The Tax Cuts and Jobs Act (“TCJA”) was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate to 21%. On December 22, 2017, Staff Accounting Bulletin No. 118 was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, we have determined that $4,438,000 of the deferred tax expense recorded in connection with the remeasurement of certain deferred tax assets and liabilities was provisional amount and reasonable estimate at January 31, 2018. We finalized our accounting for the impact of the TCJA during fiscal 2019 with no material adjustments to the previous provisional amounts recognized. On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The Company has performed an initial analysis of the impact of the CARES Act and have determined that the impact would not be significant. There were several provisions of the CARES Act that impact Company's fiscal 2020 tax filings, but were not included in the determination of the tax provision due to the date of enactment after January 31, 2020. The CARES Act provides single-employer pension companies additional time to meet the funding obligations. The Company intends to defer the timing of finding contributions to a new due date of January 1, 2021. Consequently, the tax deduction related to such contributions will be deferred until the funding payment is made. The CARES Act also modifies the limitation for business interest expense deduction. The new limitation has increased from 30 to 50 percent of adjusted taxable income. As of the issuance of this report, the Company continues to evaluate the impact of the CARES Act.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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