XML 34 R24.htm IDEA: XBRL DOCUMENT

Income and Occupancy Taxes	9 Months Ended
Oct. 31, 2020
Income Tax Disclosure [Abstract]
Income and Occupancy Taxes	18. INCOME AND OCCUPANCY TAXES The Trust is taxed as a C-Corporation. The Trust’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Trust has received various IRS and state tax jurisdiction notices which the Trust in the process of responding to in which management believes the notices are without merit and expect full remediation of all tax notices. The Trust and subsidiaries have deferred tax assets of $4.0 million which includes cumulative net operating loss carryforwards of $1.1 million and syndications of $2.9 million, and deferred tax liability associated with book/tax differences of $1.5 million as of October 31, 2020. We have evaluated the net deferred tax asset and determined that it is not more likely than not we will receive full benefit from the net operating loss carryforwards. Therefore, we have determined a valuation allowance of approximately $2.5 million. Sales and occupancy tax expense was approximately $844,000 and $78,000 due to penalties and interest for the nine and three months ended October 31, 2020, respectively. This liability arose from an occupancy tax discrepancy generated from our Albuquerque hotel. While filing our monthly return, the Trust discovered additional amounts owed under our Sales and Occupancy Account. We were subsequently notified in March 2021 of a potential underreporting and/or under collecting of occupancy tax. We were not aware of any previous notices being sent. To further complicate the situation, our filing position was such that we did not believe or know we were liable for any other tax, other than the amounts declared and filed for the periods in question. Thus we believed all of our previously filed monthly returns were originally correct as filed. We are currently in discussions with the New Mexico Taxation and Revenue Department to resolve these issues. These additional amounts due for Hotel sales and occupancy expenses are not expected to be recurring, since the Trust collects and remits all necessary occupancy taxes to the state monthly. No additional assessments have been made since September 2020.

Income and Occupancy Taxes

9 Months Ended

Oct. 31, 2020

18. INCOME AND OCCUPANCY TAXES

The Trust is taxed as a C-Corporation. The Trust’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Trust has received various IRS and state tax jurisdiction notices which the Trust in the process of responding to in which management believes the notices are without merit and expect full remediation of all tax notices. The Trust and subsidiaries have deferred tax assets of $4.0 million which includes cumulative net operating loss carryforwards of $1.1 million and syndications of $2.9 million, and deferred tax liability associated with book/tax differences of $1.5 million as of October 31, 2020. We have evaluated the net deferred tax asset and determined that it is not more likely than not we will receive full benefit from the net operating loss carryforwards. Therefore, we have determined a valuation allowance of approximately $2.5 million.

Sales and occupancy tax expense was approximately $844,000 and $78,000 due to penalties and interest for the nine and three months ended October 31, 2020, respectively. This liability arose from an occupancy tax discrepancy generated from our Albuquerque hotel. While filing our monthly return, the Trust discovered additional amounts owed under our Sales and Occupancy Account. We were subsequently notified in March 2021 of a potential underreporting and/or under collecting of occupancy tax. We were not aware of any previous notices being sent. To further complicate the situation, our filing position was such that we did not believe or know we were liable for any other tax, other than the amounts declared and filed for the periods in question. Thus we believed all of our previously filed monthly returns were originally correct as filed. We are currently in discussions with the New Mexico Taxation and Revenue Department to resolve these issues. These additional amounts due for Hotel sales and occupancy expenses are not expected to be recurring, since the Trust collects and remits all necessary occupancy taxes to the state monthly. No additional assessments have been made since September 2020.

- 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 + Details