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Income taxes
 9 Months Ended
Jan. 31, 2024
Income Taxes [Abstract]  
Income Taxes

15. Income taxes

 

Maison Solutions is a Delaware holding company that is subject to the U.S. income tax. Maison Monrovia and Maison San Gabriel are pass through entities whose income or losses flow through Maison Solution’s income tax return.

 

The provision for income taxes provisions consisted of the following components:

 

   Three Months
ended
January 31,
2024		   Three Months
ended
January 31,
2023		 
         
Current:        
Federal income tax expense  $117,066   $51,442 
State income tax expense   44,058    37,346 
Deferred:          
Federal income tax expense (benefit)   (1,852)   7,716 
State income tax expense (benefit)   (616)   2,566 
Total  $158,656   $99,070 

 

   Nine Months
ended
January 31,
2024		   Nine Months
ended
January 31,
2023		 
         
Current:        
Federal income tax expense  $314,714   $126,185 
State income tax expense   116,143    71,195 
Deferred:          
Federal income tax benefit   (4,604)   (6,175)
State income tax benefit   (1,531)   (2,054)
Total  $424,722   $189,151 

 

The following is a reconciliation of the difference between the actual (benefit) provision for income taxes and the (benefit) provision computed by applying the federal statutory rate on income (loss) before income taxes:

 

   Three Months
ended
January 31,
2024		   Three Months
ended
January 31,
2023		 
         
Federal statutory rate expense (benefit)   (79,149)   274,164 
State statutory rate, net of effect of state income tax deductible to federal income tax   (25,658)   92,473 
Permanent difference – penalties, interest, and others   73,945    29,348 
Utilization of net operating losses (“NOL”)   
—
    (244,859)
Changes in valuation allowance   189,518    (52,056)
Tax expense per financial statements   158,656    99,070 

 

   Nine Months
ended
January 31,
2024		   Nine Months
ended
January 31,
2023		 
         
Federal statutory rate expense (benefit)   (9,676)   297,661 
State statutory rate, net of effect of state income tax deductible to federal income tax   (1,249)   100,952 
Permanent difference – penalties, interest, and others   86,085    54,845 
Utilization of NOL   (24,138)   (300,508)
Change in valuation allowance   373,700    36,201 
Tax expense per financial statements   424,722    189,151 

 

Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred taxes were comprised of the following:

 

   January 31,
2024		   April 30,
2023		 
         
Deferred tax assets:        
Bad debt expense  $54,206   $70,929 
Inventory impairment loss   39,642    
—
 
Investment loss on equity method investment   17,902    
—
 
Lease liabilities, net of ROU   603,181    441,997 
NOL   451,006    583,490 
Valuation allowance   (1,151,652)   (1,085,551)
Deferred tax assets, net  $14,285   $10,865 
           
Deferred tax liability:          
Trademark acquired at acquisition of Maison Monterey Park   48,558    51,273 
Deferred tax liability, net of deferred tax assets  $34,273   $40,408 

 

As of January 31, 2024 and April 30, 2023, Maison and Maison El Monte had approximately $1.52 million and $2.25 million, respectively, of U.S. federal NOL carryovers available to offset future taxable income which do not expire but are limited to 80% of income until utilized. As of January 31, 2024 and April 30, 2023, Maison and Maison El Monte had approximately $1.89 million and $1.58 million, respectively, of California state net operating loss which can be carried forward up to 20 years to offset future taxable income. In assessing the realization 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 depends upon the Company’s future generation of taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance.

 

The Company recorded $6,421 and $17,871of interest and penalties related to understated income tax payments for the three months ended January 31, 2024 and 2023, respectively. The Company recorded $10,985 and $38,243 of interest and penalties related to understated income tax payments for the nine months ended January 31, 2024 and 2023, respectively. As of January 31, 2024 and April 30, 2023, the Company had significant uncertain tax positions of $114,267 and $103,282, respectively.

 

As of January 31, 2024, the Company’s U.S. income tax returns filed for the year ending on December 31, 2020 and thereafter are subject to examination by the relevant taxation authorities.