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Income Taxes

12 Months Ended

Oct. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 8 - INCOME TAXES:

The Company’s provision for income taxes in 2019 and 2018 consisted of the following:

		2019				2018

Current
Federal		$	10,172			$	219,233
State and local			68,974				140,534
			79,146				359,767
Deferred
Federal			(45,323	)			98,400
State and local			(4,615	)			53,365
			(49,938	)			151,765
Income tax expense		$	29,208			$	511,532

A reconciliation of the difference between the expected income tax rate using the statutory U.S. federal tax rate and the Company’s effective tax rate is as follows:

		2019				2018
Tax at the federal statutory rate		$	61,575			$	693,239
Other permanent differences			(45,107	)			(59,473	)
Effect of tax rate change							(224,283	)
State and local tax, net of federal			12,740				102,049

Provision for income taxes		$	29,208			$	511,532

Effective income tax rate			10	%			25	%

The tax effects of the temporary differences that give rise to the deferred tax assets and liabilities as of October 31, 2019 and 2018 are as follows:

		2019				2018
Deferred tax assets:
Accounts receivable		$	36,802			$	39,561
Unrealized loss							6,057
Deferred rent			49,442				66,524
Deferred compensation			96,720				146,356
Net operating loss			82,973				96,950
Stock-based compensation			121,880
Inventory			92,656				84,877

Total deferred tax asset		$	480,473			$	440,325

Deferred tax liability:
Intangible assets acquired			484,932				484,932
Unrealized gain			32,656
Fixed assets			354,644			$	397,090

Total deferred tax liabilities		$	872,232			$	882,022

A valuation allowance was not provided at October 31, 2019 or 2018. In assessing the realizability of deferred tax assets, management 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 during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are expected to be deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced.

As of October 31, 2019 and 2018, the Company did not have any unrecognized tax benefits or open tax positions. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of October 31, 2019 and 2018, the Company had no accrued interest or penalties related to income taxes. The Company currently has no federal or state tax examinations in progress.

The Company files a U.S. federal income tax return and California, Colorado, Connecticut, Idaho, Kansas, Michigan, New Jersey, New York, New York City, Virginia, Texas, Rhode Island, South Carolina, and Oregon state tax returns. The Company’s federal income tax return is no longer subject to examination by the federal taxing authority for years before fiscal 2016. The Company’s California, Colorado and New Jersey and Texas income tax returns are no longer subject to examination by their respective taxing authorities for the years before fiscal 2015. The Company’s Oregon, New York, Kansas, South Carolina, Rhode Island, Connecticut and Michigan income tax returns are no longer subject to examination by their respective taxing authorities for the years before fiscal 2016.