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INCOME TAXES
 12 Months Ended
Oct. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 7 - INCOME TAXES:

 

The Company’s provision (benefit) for income taxes in 2024 and 2023 consisted of the following:

 

   2024   2023 
         
Current          
Federal  $82,332   $- 
State and local   18,544    - 
Total   100,876    - 
Deferred          
Federal   611,317    (223,120)
State and local   137,692    (45,100)
Total   749,009    (268,220)
Provision (benefit) for income taxes  $849,885   $(268,220)

 

 

COFFEE HOLDING CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2024 AND 2023

 

NOTE 7 - INCOME TAXES (cont’d):

 

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:

 

   2024   2023 
Expense (Benefit) from for tax at the federal statutory rate  $644,259   $(231,797)
Goodwill impairment   -    - 
Other permanent differences   23,718    (51,500 
Return to provision   29,959    51,500 
Deferred Tax change in effective rate   

6,838

      
State and local tax, net of federal   145,112    (36,423)
           
Expense (Benefit from) income taxes  $849,885   $(268,220)
           
Effective income tax rate   28%   25%

 

The tax effects of the temporary differences that give rise to the deferred tax assets and liabilities as of October 31, 2024 and 2023 are as follows:

 

   2024   2023 
Deferred tax assets:          
Accounts receivable  $37,051   $34,539 
Unrealized loss   -    - 
Deferred rent   942    28,483 
Deferred compensation   31,233    28,908 
Net operating loss   503,413    1,039,047 
Stock-based compensation   645,892    602,107 
Inventory   93,879    105,794 
           
Total deferred tax asset   1,312,410    1,838,878 
           
Deferred tax liabilities:          
Intangible assets acquired   95,347    70,021 
Unrealized gain   132,625    - 
Buildings, machinery and equipment   492,040    427,450 
           
Total deferred tax liabilities   720,012    497,471 
Net deferred tax asset  $592,398   $1,341,407 

 

A valuation allowance was not provided at October 31, 2024 or 2023. 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.

 

 

COFFEE HOLDING CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2024 AND 2023

 

NOTE 7 - INCOME TAXES (cont’d):

 

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, 2024 and 2023, 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, 2024, and 2023, 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, Florida, Idaho, Illinois, Kansas, Louisiana, Michigan, Massachusetts, Montana, New Jersey, New York, New York City, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, and Virginia 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 2021. 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 2021. 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 2021.

 

As of October 31, 2024, and 2023, the Company had cumulative net operating loss carryforwards of approximately $1,956,523 and $3,524,744 respectively, $153,235 of which begin to expire in 2038 and $1,803,288 of the net operating loss carryforwards that do not expire. In accordance with Section 382 of the Internal Revenue code, the usage of $153,235 of the Company’s net operating loss carryforwards is subject to an annual limitation of $60,469, the remaining operating loss carryforwards of $1,803,288 have no such limitations. These net operating loss carryforwards may be further limited in the event of a change in ownership.

 

 

COFFEE HOLDING CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2024 AND 2023