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Note 14 - Income Taxes | 12 Months Ended
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Nov. 30, 2017
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
( 14 ) | Income Taxes
Total income tax expense (benefit) for the years ended November 30, 2017 and 2016 consists of the following:
|  | November 30, 2017 |  |  | November 30, 2016 |
Current Expense (benefit) |  | $ | 15,360 |  |  | $ | (288,935 | )
Deferred expense (benefit) |  |  | (572,175 | ) |  |  | (29,939 | )
|  | $ | (556,815 | ) |  | $ | (318,874 | )
The reconciliation of the statutory Federal income tax rate is as follows:
|  | November 30, 2017 |  |  | November 30, 2016 |
Statutory federal income tax rate |  |  | 34.0 | % |  |  | 34.0 | %
Valuation allowance on foreign net operating loss |  |  | (7.8 | ) |  |  | 0.0 |
Permanent differences and other |  |  | (0.7 | ) |  |  | (6.0 | )
|  |  | 25.5 | % |  |  | 28.0 | %
Tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabi lities) at November 30, 2017 and 2016 are presented below:
|  | November 30 |
|  | 2017 |  |  | 2016 |
Current deferred tax assets (liabilities): |  |  |  |  |  |  |  |
Accrued expenses |  | $ | 95,000 |  |  | $ | 110,000 |
Inventory capitalization |  |  | 33,000 |  |  |  | 16,000 |
N et operating loss and tax credit carryforward |  |  | 586,000 |  |  |  | 133,000 |
Asset reserves |  |  | 746,000 |  |  |  | 808,000 |
Total current deferred tax assets |  | $ | 1,460,000 |  |  | $ | 1,067,000 |
Non-current deferred tax assets |  |  |  |  |  |  |  |
Property, plant, and equipment |  | $ | (559,000 | ) |  | $ | (737,000 | )
Total non-current deferred tax assets (liabilities) |  | $ | (559,000 | ) |  | $ | (737,000 | )
Net deferred taxes |  | $ | 901,000 |  |  | $ | 330,000 |
Based on the Company ’s adoption of ASU 2015 - 17, Income Taxes, the Company has prospectively classified the 2017 net deferred tax asset as a noncurrent asset in the accompanying financial statements. The 2016 presentation reports the deferred tax asset and deferred tax liability as a current asset and noncurrent liability pursuant to previous GAAP guidance. 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. Based on these assessments, in fiscal 2016 the Company recorded a reserve against its deferred tax assets related to its net operation loss of its Canadian operations of approximately $75,000. During fiscal 2017 the Company has continued to create a reserve for any estimated income tax benefits related to the Canadian net operating losses. From the time of acquisition, the Company has not yet generated taxable income from these operations, and management believes that the amount of this deferred tax asset will not be realized. The Company’s net operating loss amounting to approximately $1,800,000 and tax credit carryforward amounting to approximately $105,000 for its US operations expires on November 30, 2036 and 2037. Management believes that the Company will be able to utilize the US net operating losses before their expiration. On December 22, 2017, a new tax law was enacted that reduces the top corporate income tax rate from 35% to 21 %. The law and rate change is generally effective for tax years beginning after December 31, 2017. While the Company is assessing the impact of the law on its reported assets, liabilities, and results of operations, management believes that going forward, the overall rate reduction will have a positive impact on the Company’s net earnings in the long run. However, during the first quarter of the Company’s 2018 fiscal year, its reported net deferred tax asset will have to be substantially restated using the new lower rates. Based on the Company’s recorded deferred tax asset at November 30, 2017, management estimates the rate change will reduce the Company’s deferred tax asset by approximately $300,000, which will be recorded as an adjustment to its tax provision in the first quarter ending February 28, 2018.

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- 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 Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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