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INCOME TAX | 12 Months Ended
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Jul. 31, 2021
Income Tax Disclosure [Abstract] |
INCOME TAX | 6. INCOME TAX: Income taxes provided for the years ended July 31, 2021 and 2020 consist of the following:
| 2021 |  | 2020
Current: |  |  |  |  |  |  |
Federal | $ | — |  |  | $ | — |
Deferred taxes (benefit): |  |  |  |  |  |  |
Federal |  | (108,000 | ) |  |  | (247,000 | )
State |  | (51,000 | ) |  |  | (108,000 | )
Income tax provision (benefit) | $ | (159,000 | ) |  | $ | (355,000 | )
Taxes provided for the years ended July 31, 2021 and 2020 differ from amounts which would result from applying the federal statutory tax rate to pre-tax income, as follows:
|  | 2021 |  |  | 2020 |
Income (loss) before income taxes |  | $ | 239,032 |  |  |  | (1,261,005 | )
Paycheck Protection Program Loan Forgiveness |  |  | (722,726 | ) |  |  | — |
Other-net |  |  | (21,690 | ) |  |  | (16,158 | )
Adjusted pre-tax income (loss) |  | $ | (505,384 | ) |  | $ | (1,277,163 | )
Statutory rate |  |  | 21.00 | % |  |  | 21.00 | %
Income tax provision (benefit) at statutory rate |  | $ | (106,131 | ) |  | $ | (268,204 | )
State deferred income taxes (benefit) |  |  | (51,000 | ) |  |  | (108,000 | )
Other-net |  |  | (1,869 | ) |  |  | 21,204 |
Income tax provision (benefit) |  | $ | (159,000 | ) |  | $ | (355,000 | )
The Company has a federal net operating loss carryforward approximating $10,341,000 and $8,404,000 as of July 31, 2021 and July 31, 2020, respectively, available to offset future taxable income. As of July 31, 2021 and 2020, the Company had unused state and city net operating loss carryforwards of approximately $12,293,000 and $10,526,000, for state, respectively, and $8,274,000 for city, available to offset future taxable income. The net operating loss carryforwards will begin to expire, if not used, in 2035. New York State and New York City taxes are calculated using the higher of taxes based on income or the respective capital-based franchise taxes. Beginning with the Company’s tax year ended July 31, 2016, changes in the law required the state capital-based tax will be phased out over a 7-year period. New York City taxes will be based on capital for the foreseeable future. Capital-based franchise taxes are recorded to administrative and general expense. State tax amounts in excess of the capital-based franchise taxes are recorded to income tax expenses. Due to both the application of the capital-based tax and due to the possible absence of city taxable income, the Company does not record city deferred taxes. Generally, tax returns filed are subject to audit for three years by the appropriate taxing jurisdictions. The statute of limitations in each of the state jurisdictions in which the Company operates remain open until the years are settled for federal income tax purposes, at which time amended state income tax returns reflecting all federal income tax adjustments are filed. As of July 31, 2021, there were no income tax audits in progress that would have a material impact on the consolidated financial statements. Significant components of the Company’s deferred tax assets and liabilities as of July 31, 2021 and 2020 are a result of temporary differences related to the items described as follows:
|  | 2021 |  | 2020
|  | Deferred |  | Deferred |  | Deferred |  | Deferred
|  | Tax Assets |  | Tax Liabilities |  | Tax Assets |  | Tax Liabilities
Rental income received in advance |  | $ | 148,033 |  | $ | — |  | $ | 175,145 |  | $ | —
Anticipated PPP loan expenses to be forgiven |  |  | — |  |  | — |  |  | 199,390 |  |  | —
Operating lease liabilities |  |  | 7,680,923 |  |  | — |  |  | 8,013,099 |  |  | —
Federal net operating loss carryforward |  |  | 2,171,510 |  |  | — |  |  | 1,764,769 |  |  | —
State net operating loss carryforward |  |  | 809,951 |  |  | — |  |  | 693,541 |  |  | —
Unbilled receivables |  |  | — |  |  | 569,029 |  |  | — |  |  | 412,343
Property and equipment |  |  | — |  |  | 4,963,194 |  |  | — |  |  | 4,671,246
Unrealized gain on marketable securities |  |  | — |  |  | 430,455 |  |  | — |  |  | 307,375
Operating lease right-of-use assets |  |  | — |  |  | 9,536,322 |  |  | — |  |  | 10,229,036
Other |  |  | 106,583 |  |  | — |  |  | 33,056 |  |  | —
|  | $ | 10,917,000 |  | $ | 15,499,000 |  | $ | 10,879,000 |  | $ | 15,620,000
Net deferred tax liability |  |  |  |  | $ | 4,582,000 |  |  |  |  | $ | 4,741,000
Management periodically assesses the realization of its net deferred tax assets by evaluating all available evidence, both positive and negative, associated with the Company and determining whether, based on the weight of that associated evidence, a valuation allowance for the deferred tax assets is needed. Based on this analysis, management has determined that it is more likely than not that future taxable income will be sufficient to fully utilize the federal and state deferred tax assets at July 31, 2021. Components of the deferred tax provision (benefit) for the years ended July 31, 2021 and 2020 consist of the following:
|  | 2021 |  |  | 2020 |
Book depreciation exceeding (less than) tax depreciation |  | $ | 291,723 |  |  | $ | (1,691,703 | )
Increase in reserve for bad debts |  |  | (65,109 | ) |  |  | (17,220 | )
Lease expense per book in excess of cash paid |  |  | (360,537 | ) |  |  | 2,477,725 |
Federal net operating loss carryforward |  |  | (406,742 | ) |  |  | (924,647 | )
State net operating loss carryforward |  |  | (116,410 | ) |  |  | (22,687 | )
Decrease of rental income received in advance |  |  | 27,111 |  |  |  | 39,637 |
Anticipated PPP loan expenses to be forgiven |  |  | 199,390 |  |  |  | (199,390 | )
Increase (decrease) in unbilled receivables |  |  | 156,686 |  |  |  | (47,962 | )
Other |  |  | 114,888 |  |  |  | 31,247 |
|  | $ | (159,000 | ) |  | $ | (355,000 | )

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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