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Income Taxes | 12 Months Ended
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Oct. 31, 2013
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income tax expense (benefit) for the years ended October 31, 2013, 2012 and 2011 consists of:
Fiscal year ended October 31, 2013 |  | Current |  | Deferred |  | Total
U.S. Federal |  | $ | (640,652 | ) |  | $ | 930,956 |  |  | $ | 290,304 |
State |  | (10,307 | ) |  | 67,791 |  |  | $ | 57,484 |
Totals |  | $ | (650,959 | ) |  | $ | 998,747 |  |  | $ | 347,788 |
Fiscal year ended October 31, 2012 |  | Current |  | Deferred |  | Total
U.S. Federal |  | $ | 1,648,945 |  |  | $ | (491,256 | ) |  | $ | 1,157,689 |
State |  | 167,160 |  |  | (67,514 | ) |  | $ | 99,646 |
Totals |  | $ | 1,816,105 |  |  | $ | (558,770 | ) |  | $ | 1,257,335 |
Fiscal year ended October 31, 2011 |  | Current |  | Deferred |  | Total
U.S. Federal |  | $ | 137,721 |  |  | $ | 143,800 |  |  | $ | 281,521 |
State |  | 128,434 |  |  | (11,703 | ) |  | $ | 116,731 |
Totals |  | $ | 266,155 |  |  | $ | 132,097 |  |  | $ | 398,252 |
Reported income tax expense (benefit) for the years ended October 31, 2013, 2012 and 2011 differs from the “expected” tax expense (benefit), computed by applying the U.S. Federal statutory income tax rate of 34% to income (loss) before income taxes as follows:
| Year ended October 31,
| 2013 |  | 2012 |  | 2011
“Expected” tax expense | $ | 93,605 |  |  | 1,320,402 |  |  | $ | 290,955 |
Increase (reduction) in income tax expense resulting from: |  |  |  |  |
Benefit from domestic manufacturing deduction | — |  |  | (177,230 | ) |  | (13,702 | )
Nondeductible compensation | 93,886 |  |  | — |  |  | — |
State income taxes, net of federal benefit | 39,331 |  |  | 62,936 |  |  | 77,042 |
Loss of permanent deductions due to NOL carryback | 54,907 |  |  | — |  |  | — |
Other differences, net | 66,059 |  |  | 51,227 |  |  | 43,957 |
Reported income tax expense | $ | 347,788 |  |  | $ | 1,257,335 |  |  | $ | 398,252 |
The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and deferred tax liabilities as of October 31, 2013 and 2012 are presented below:
| October 31,
| 2013 |  | 2012
Deferred tax assets: |  |  |
Accounts receivable, due to allowances for doubtful accounts and sales returns | $ | 166,789 |  |  | $ | 77,356 |
Inventories, due to allowance for damaged and slow-moving inventories and additional costs inventoried for tax purposes pursuant to the Tax Reform Act of 1986 | 951,543 |  |  | 995,304 |
Liabilities recorded for accrued expenses, deductible for tax purposes when paid | 119,054 |  |  | 755,772 |
Share-based compensation expense | 50,541 |  |  | 205,131 |
Investment in Centric Solutions | 137,119 |  |  | 153,631 |
Net operating loss carryforwards | 960,984 |  |  | 951,397 |
Other | 113,579 |  |  | 92,766 |
Total gross deferred tax assets | 2,499,609 |  |  | 3,231,357 |
Deferred tax liabilities: |  |  |
Plant and equipment, due to differences in depreciation and capital gain recognition | (687,090 | ) |  | (428,010 | )
Other receivables, due to accrual for financial reporting purposes | (7,919 | ) |  | — |
Total gross deferred tax liabilities | (695,009 | ) |  | (428,010 | )
Net deferred tax asset | $ | 1,804,600 |  |  | $ | 2,803,347 |
As a result of the acquisition of AOS, the Company recorded certain deferred tax assets totaling $1,517,605 (after purchase accounting adjustments), related to net operating loss ("NOL") carryforwards of $4,455,525, estimated to be available after considering Internal Revenue Code Section 382 limitations. As of October 31, 2013, $2,790,210 of these NOL carryforwards remain unused and may be used to reduce future taxable income. These NOL carryforwards begin to expire in fiscal year ending October 31, 2024. The Company generated a Federal NOL and certain state NOLs during fiscal year 2013, which the Company intends to carry back and realize in the coming year. As a result, the Company recognized an income tax receivable in the current year for these NOLs. The Company generated $14,502 of available state NOLs during fiscal year 2013 which it plans to carry forward. These state NOLs are ineligible for carry back and have expiration dates that vary by state jurisdiction. Based on the Company’s historical and projected pretax earnings and other relevant factors, management believes that it is more likely than not that the Company’s deferred tax assets at October 31, 2013 will be realized. The Company estimates a liability for uncertain tax positions taken or expected to be taken in a tax return. The liability for uncertain tax positions is included in other noncurrent liabilities on the accompanying consolidated balance sheets. A reconciliation of the unrecognized tax benefits for fiscal years 2013 and 2012 follows:
| October 31,
| 2013 |  | 2012
Unrecognized tax benefits balance at beginning of year | $ | 221,339 |  |  | $ | 205,171 |
Gross decreases for tax positions of prior years | (23,282 | ) |  | (30,055 | )
Gross increases for current year tax positions | 250 |  |  | 46,223 |
Unrecognized tax benefits balance at end of year | $ | 198,307 |  |  | $ | 221,339 |
During fiscal year 2013, the Company accrued interest and penalties of $7,738 and $5,735, respectively, related to unrecognized tax benefits. During fiscal year 2012, the Company accrued interest of $2,144 and reduced its accrual of penalties by $7,514, related to unrecognized tax benefits. As of October 31, 2013 and 2012, the Company had approximately $108,756 and $95,283, respectively, of accrued interest and penalties related to uncertain tax positions. The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized is $110,741 and $128,573 as of October 31, 2013 and 2012, respectively. The Company does not expect its unrecognized tax benefits to change significantly in the next 12 months. The Company files income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. The statute of limitations remains open for U.S. and certain state income tax examinations for years ended October 31, 2010 through October 31, 2012.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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