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INCOME TAXES | 12 Months Ended
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Mar. 31, 2014
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | NOTE 11 - INCOME TAXES The Company files separate tax returns in the United States and in Macau. The Macau Subsidiary has received approval from the Macau government to operate its business as a Macau Offshore Company (MOC), and is exempt from the Macau income tax. For the fiscal years ended March 31, 2014, 2013 and 2012, the Macau Subsidiary recorded no tax provision. Due to the change of control of the Company, the net operating loss carry over is subject to the IRS Section 382 limitation. As of March 31, 2014, 2013 and 2012, The Singing Machine had net deferred tax assets before valuation allowances of approximately $3.2 million, $3.2 million, and $3.9 million, respectively, against which the Company recorded valuation allowances totaling approximately $0.8 million, $1.6 million, and $3.9 million, respectively. The income tax benefit for federal, foreign, and state income taxes in the consolidated statements of income consisted of the following components for 2014, 2013 and 2012:
|  | 2014 |  | 2013 |  | 2012 |
Income tax provision: |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | - |  | $ | - |  | $ | - |
State |  |  | - |  |  | - |  |  | - |
Total current Federal and State |  | $ | - |  | $ | - |  | $ | - |
Deferred: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (675,447) |  | $ | (1,412,535) |  | $ | - |
State |  |  | (103,350) |  |  | (206,924) |  |  | - |
Total income tax benefit |  | $ | (778,797) |  | $ | (1,619,459) |  | $ | - |
The United States and foreign components of income (loss) before income taxes are as follows:
|  | 2014 |  | 2013 |  | 2012 |
United States |  | $ | (62,095) |  | $ | 92,122 |  | $ | (432,111) |
Foreign |  |  | 287,614 |  |  | 1,429,354 |  |  | 895,227 |
|  | $ | 225,519 |  | $ | 1,521,476 |  | $ | 463,116 |
The actual tax expense differs from the "expected" tax expense for the years ended March 31, 2014, 2013 and 2012 (computed by applying the U.S. Federal Corporate tax rate of 34 percent to income before taxes) as follows:
|  | 2014 |  | 2013 |  | 2012 |
Expected tax expense |  | $ | 76,676 |  | $ | 517,302 |  | $ | 157,459 |
State income taxes, net of Federal income tax benefit |  |  | 7,815 |  |  | 25,236 |  |  | 26,299 |
Permanent differences |  |  | 8,374 |  |  | 5,421 |  |  | 5,247 |
Deemed Dividend |  |  | 108,864 |  |  | 537,866 |  |  | 304,377 |
Change in valuation allowance |  |  | (820,040) |  |  | (2,246,235) |  |  | 385,219 |
Tax rate differential on foreign earnings |  |  | (111,164) |  |  | (537,866) |  |  | (304,377) |
Prior year adjustments |  |  | (49,322) |  |  | 78,817 |  |  | (574,224) |
Actual tax benefit |  | $ | (778,797) |  | $ | (1,619,459) |  | $ | - |
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:
|  | 2014 |  | 2013 |  | 2012 |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |
Federal net operating loss carryforward |  | $ | 2,076,141 |  | $ | 2,189,622 |  | $ | 2,579,924 |
State net operating loss carryforward |  |  | 413,401 |  |  | 413,849 |  |  | 431,306 |
AMT credit carryforward |  |  | 36,808 |  |  | 36,808 |  |  | 70,090 |
Inventory differences |  |  | 490,716 |  |  | 358,130 |  |  | 438,773 |
Allowance for doubtful accounts |  |  | 66,658 |  |  | 67,849 |  |  | 57,308 |
Reserve for sales returns |  |  | 90,895 |  |  | 81,082 |  |  | 74,718 |
Stock option compensation expense |  |  | 59,713 |  |  | - |  |  | - |
Stock warrants |  |  | 39,193 |  |  | - |  |  | - |
Charitable contributions |  |  | - |  |  | - |  |  | 60,700 |
Accrued Vacation |  |  | 10,241 |  |  | 9,839 |  |  | 9,551 |
Depreciation and amortization |  |  | - |  |  | 81,739 |  |  | 135,660 |
Amortization of reorganization intangible |  |  | - |  |  | - |  |  | 7,664 |
Total deferred tax assets |  |  | 3,283,766 |  |  | 3,238,918 |  |  | 3,865,694 |
Deferred tax liability: |  |  |  |  |  |  |  |  |  |
Depreciation |  |  | (86,091) |  |  | - |  |  | - |
Net deferred tax asset before valuation allowance |  |  | 3,197,675 |  |  | 3,238,918 |  |  | 3,865,694 |
Valuation allowance |  |  | (799,419) |  |  | (1,619,459) |  |  | (3,865,694) |
Net deferred tax assets |  | $ | 2,398,256 |  | $ | 1,619,459 |  | $ | - |
Due to economic conditions prior to the fiscal year ended March 31, 2013, the Company believed that it was more likely than not that the benefit from the net deferred tax assets would not be realized, and established a valuation allowance on the deferred tax assets for the entire balance. During the fiscal year ended March 31, 2014 and March 31, 2013, the Company released a portion of the valuation allowance. The release of the valuation allowance was determined in accordance with the provisions of ASC 740, which require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. The analysis performed to assess the realizability of the deferred tax assets included an evaluation of the pattern and timing of the reversals of temporary differences and the length of carryback and carry forward periods available under the applicable federal and state laws; and the amount and timing of future taxable income. The analysis indicated that it is more likely than not that at least 75% of the deferred tax asset recorded will be realized. As a result, approximately $0.8 million and $1.6 million of the valuation allowance were released during the fiscal years ended March 31, 2014 and March 31, 2013, respectively. The Company recognized an approximate tax benefit of $0.8 million and $1.6 million for the fiscal years ended March 31, 2014 and March 31, 2013, respectively. At March 31, 2014, the Company has federal tax net operating loss carry forwards in the amount of approximately $6.1 million that will expire beginning in the year 2027. In addition, the Company has state tax net operating loss carry forwards in the amount of approximately $8.9 million that will expire beginning in 2015. The Company has now exhausted its ability to carry back any further losses and therefore will only be able to recognize tax benefits to the extent that it has future taxable income. Net operating loss carry forward amounts and their year of expiration are as follows:
Year of |  | NOL |  | NOL |
Expiration |  | Federal |  | State |
2014 |  | $ | - |  | $ | - |
2015 |  |  | - |  |  | 1,984,929 |
2016 |  |  | - |  |  | - |
2017 |  |  | - |  |  | - |
2018 |  |  | - |  |  | - |
2019 and beyond |  |  | 6,106,299 |  |  | 6,884,857 |
|  | $ | 6,106,299 |  | $ | 8,869,786 |
The Company is no longer subject to income tax examinations for fiscal years before 2011.

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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 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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