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FEDERAL INCOME TAXES
 12 Months Ended
Jan. 31, 2025
Income Tax Disclosure [Abstract]  
FEDERAL INCOME TAXES

18. FEDERAL INCOME TAXES

 

The Trust and subsidiaries have income tax net operating loss carryforward of approximately $7M at January 31, 2025. In 2005, the Trust had an ownership change within the meaning of the Internal Revenue Code Section 382. However, the Trust determined that such ownership change would not have a material impact on the future use of the net operating losses.

 

The Trust amended the Federal and State Tax Returns for tax years 2017 and 2018, resulting in a recalculation of the net operating loss carry-forward. The impact of the amended returns are reflected in the below data.

 

Total and net deferred income tax assets at January 31,

 

   2025   2024 
Net operating loss carryforwards  $

3,053,465

   $2,113,926 
Bad debt allowance   -    - 
Accrued expenses   

(2,622

)   (2,622)
Syndications   2,923,000

    2,923,000 
Prepaid insurance   95,532    64,963 
Alternative minimum tax credit   51,000    51,000 
Total deferred tax asset   

6,120,375

    5,150,267 
           
Deferred income tax liability associated with book/tax   

(1,785,672

)   (1,848,478)
Net deferred income tax asset   

4,334,703

    3,301,790 
Valuation Allowance   

(4,334,703

)   (3,301,790)
Net deferred income tax   -    - 

 

Income taxes for the year ended January 31,

 

   2025   2024 
Current income tax provision (benefit)   

355

   (100)
Deferred income tax benefit   (392,348)   (213,744)
Change in valuation allowance   

392,348

    213,744
Net income tax expense (benefit)   355   (100)

 

The differences between the statutory and effective tax rates are as follows for the year ended January 31,

 

   Amount   Percent 
   2025 
   Amount   Percent 
Federal statutory rates  $(248,329)   21%
State income taxes   (61,670)   5%
Change in valuation allowance   (428,200)   36%
True-up in prior year returns   -    0%
Effective Rate   -    62%

 

The differences between the statutory and effective tax rates are as follows for the year ended January 31,

 

   Amount   Percent 
   2024 
   Amount   Percent 
Federal statutory rates  $(236,478)   21%
State income taxes   (58,727)   5%
Change in valuation allowance   (213,700)   19%
True-up in prior year returns   -    0%
Effective Rate   -    45%

 

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 $6.1 million which includes cumulative net operating loss carryforwards of $3.1 million and syndications of $2.9 million, and deferred tax liability associated with book/tax differences of $1.8 million as of January 31, 2025. 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 $4.3 million.