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Income Taxes

12 Months Ended

Feb. 28, 2019

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 11: INCOME TAXES

The annual provision (benefit) for income taxes differs from amounts computed by applying the maximum U.S. Federal income tax rate of 21% to pre-tax income as follows:

		February 28,
		2019				2018
Expected federal income tax		$	38,101			$	156,421
State tax, net of federal			11,430				24,383
Research and development tax credits			(19,588	)			(57,994	)
Under accrual of prior year state taxes			—				40,793
Change in recapture tax rate from 39.3% to 27.3%			—				15,343
Permanent timing difference			2,272				33,107
Change in valuation allowances			(36,425	)			(159,300	)
Other adjustments			24,057				39,103
Income tax expense		$	19,847			$	91,856

The deferred tax asset and liability are comprised of the following:

		February 28,
		2019				2018
Deferred tax asset
Inventory		$	74,000			$	104,800
Allowance for accounts receivable			13,000				18,100
Accrued expenses and other			37,000				111,200
Research tax credits			208,000				208,300
Valuation allowance			—				(46,000	)
Deferred tax asset – Long Term			332,000				396,400
Deferred tax liability
Intangible asset amortization			(25,000	)			(25,000	)
Building and leasehold depreciation			(346,000	)			(360,400	)
Deferred tax liability – Long Term		$	(371,000	)		$	(385,400	)

At February 28, 2019 and 2018, the Company had $208,000 of research and development tax credits being carried forward.

Deferred income taxes have been provided by temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. To the extent allowed by GAAP, the Company provides a valuation allowance against the deferred tax assets for amounts when the realization is uncertain.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act establishes new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate tax rate to 21%, effective March 1, 2018. Tax returns for the prior three years are subject to examination by the IRS.

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- References

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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

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