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Note 9 - Income Taxes
 3 Months Ended
Jan. 31, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 9 – Income taxes

 

We use an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate, to determine its quarterly provision (benefit) for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

 

We recorded income tax benefits of $831,000 and $160,000 for the three months ended January 31, 2024 and 2023, respectively. The effective tax rate was 37.6% for the three months ended January 31, 2024, compared to 12.3% for the three months ended January 31, 2023. The change in the effective tax rate is primarily due to the Company's full year forecasted financial loss.             

                                                                     

We had $245,000 and $178,000 of unrecognized tax benefits, as of January 31, 2024 and October 31, 2023, respectively. The unrecognized tax benefits, if recognized, would result in a net tax benefit of $226,000 as of January 31, 2024.

 

The Company assesses all positive and negative evidence in determining if, based on the weight of such evidence, a valuation allowance is required to be recorded against the deferred tax assets as of January 31, 2024. The Company has concluded that the positive evidence of indefinite lived nature of certain tax attributes on hand, and cumulative pre-tax book income on a rolling twelve-quarter basis outweigh the negative evidence of recent losses. Accordingly, the Company has not provided for additional valuation allowance as of January 31, 2024. The realization of the deferred tax assets is contingent upon the Company’s ability to generate sufficient future taxable income. In the event that negative evidence outweighs positive evidence in future periods, the Company may need to record additional valuation allowance, which could have a material impact on our financial position.