v3.10.0.1

Income Taxes | 9 Months Ended
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Aug. 31, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES CCA and its subsidiaries file a consolidated federal income tax return. The Company previously adopted the provisions of ASC Subtopic 740-10-25, Uncertain Tax Positions. Management believes that there were no unrecognized tax benefits, or tax positions that would result in uncertainty regarding the deductions taken, as of August 31, 2018 and August 31, 2017. ASC Subtopic 740-10-25 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. As a result of the enactment by the United States Government of public law 115-97, an Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 (formerly known as the Tax Cut and Jobs Act of 2017), federal corporate tax rates for periods beginning after January 1, 2018 have been reduced to 21%. The Company's federal rate was previously 34%. The Company values its deferred tax assets and liabilities using the tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The Company, prior to the enactment of public law 115-97, had valued its deferred tax assets and liabilities at a combined federal and state tax rate of 36.45%. Due to the corporate tax rate change, the Company determined that its deferred tax assets and liabilities should be valued based on an estimated future tax rate of 24.13%, effective in the first quarter of fiscal 2018. The SEC issued Staff Accounting Bulletin ("SAB") 118, which provides guidance on accounting for the tax effects of public law 115-97. SAB 118 provides a measurement period that should not extend beyond one year from the enactment date for companies to complete the accounting under ASC 740. To the extent that a company’s accounting for certain income tax effects of public law 115-97 is incomplete but is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. The change in rate caused the Company to record an additional tax expense as part of the provision for income tax in the first quarter of fiscal 2018. In addition, ASU 2015-17 is effective with the first quarter of fiscal 2018 which requires that all deferred tax assets be classified as long-term. The Company as of November 30, 2017 had $2,079,988 of deferred tax assets that were recorded as a current asset. This amount has been retrospectively reclassified as a non-current asset as of November 30, 2017. The following chart shows the calculation of the previous tax rate and the new tax rate:
| Previous Rate | New Rate
Federal rate | 34.00 | % | 21.00 | %
State rate, net of federal tax benefit | 2.45 | % | 3.13 | %
Total | 36.45 | % | 24.13 | %
A portion of the loss carry forward deferred tax asset was valued at a slightly higher blended rate of 25.19%, due to the tax law taking effect on January 1, 2018. The deferred compensation amount is from the issuance of stock options (see Note 12 - Stock-Based Compensation), and will be realized in future years if the options are exercised. At August 31, 2018 and November 30, 2017, respectively, the Company had temporary differences arising from the following:
|  | August 31, 2018 |  | November 30, 2017
Type |  | Amount |  | Deferred Tax |  | Amount |  | Deferred Tax
Depreciation |  | $ | (468,017 | ) |  | $ | (112,925 | ) |  | $ | (378,580 | ) |  | $ | (137,992 | )
Reserve for bad debts |  | 15,368 |  |  | 3,708 |  |  | 6,629 |  |  | 2,416 |
Reserve for returns |  | 619,185 |  |  | 149,399 |  |  | 246,513 |  |  | 89,854 |
Accrued returns |  | 110,436 |  |  | 26,646 |  |  | 109,646 |  |  | 39,966 |
Reserve for obsolete inventory |  | 135,164 |  |  | 32,613 |  |  | 158,269 |  |  | 57,689 |
Vacation accrual |  | 52,233 |  |  | 12,603 |  |  | 70,856 |  |  | 25,827 |
Alternative minimum tax carry forward |  | — |  |  | 103,040 |  |  | — |  |  | 122,360 |
Research and development tax credit |  | — |  |  | 65,175 |  |  | — |  |  | — |
Deferred Compensation |  | 491,382 |  |  | 118,563 |  |  | 487,061 |  |  | 177,534 |
Bonus obligation unpaid |  | — |  |  | — |  |  | 400,166 |  |  | 145,861 |
Charitable contributions |  | 242,650 |  |  | 58,548 |  |  | 305,633 |  |  | 111,403 |
Section 263A costs |  | 208,120 |  |  | 50,216 |  |  | 48,317 |  |  | 17,612 |
Loss carry forward |  | 24,789,723 |  |  | 5,990,894 |  |  | 24,279,259 |  |  | 8,849,789 |
Net deferred tax asset |  | $ | 26,196,244 |  |  | $ | 6,498,480 |  |  | $ | 25,733,769 |  |  | $ | 9,502,319 |
Income tax expense (benefit) is made up of the following components:
| Three Months Ended |  | Nine Months Ended
| August 31, 2018 |  | August 31, 2017 |  | August 31, 2018 |  | August 31, 2017
Current tax - Federal | $ | — |  |  | $ | 43,875 |  |  | $ | — |  |  | $ | 59,875 |
Current tax - State & Local | 595 |  |  | 312 |  |  | 5,944 |  |  | 6,189 |
Deferred tax | (70,273 | ) |  | 310,629 |  |  | 3,023,507 |  |  | 816,846 |
Total Income Tax (Benefit) Expense | $ | (69,678 | ) |  | $ | 354,816 |  |  | $ | 3,029,451 |  |  | $ | 882,910 |
Prepaid and refundable income taxes are made up of the following components:
Prepaid and refundable income taxes |  | Federal |  | State & Local |  | Total
August 31, 2018 |  | $ | 20,335 |  |  | $ | 7,449 |  |  | $ | 27,784 |
November 30, 2017 |  | $ | 1,015 |  |  | $ | 37,138 |  |  | $ | 38,153 |
Income taxes payable are made up of the following components:
Income Taxes Payable |  | Federal |  | State & Local |  | Total
August 31, 2018 |  | $ | — |  |  | $ | 950 |  |  | $ | 950 |
A reconciliation of the provision for income taxes computed at the statutory rate to the effective rate for the three months and nine months ended August 31, 2018, and August 31, 2017 is as follows:
|  | Three Months Ended |  | Three Months Ended
|  | August 31, 2018 |  | August 31, 2017
|  | Amount |  | Percent of Pretax Income |  | Amount |  | Percent of Pretax Income
Provision for income taxes at federal statutory rate |  | $ | (57,404 | ) |  | 21.00 | % |  | $ | 249,050 |  |  | 34.00 | %
Changes in provision for income taxes resulting from: |  |  |  |  |  |  |  |
State income taxes, net of federal income tax benefit |  | (8,556 | ) |  | 3.13 | % |  | 21,242 |  |  | 2.90 | %
Non-deductible expenses and other adjustments |  | (3,718 | ) |  | 1.36 | % |  | 84,524 |  |  | 11.54 | %
(Benefit from) Provision for income taxes at effective rate |  | $ | (69,678 | ) |  | 25.49 | % |  | $ | 354,816 |  |  | 48.44 | %
|  | Nine Months Ended |  | Nine Months Ended
|  | August 31, 2018 |  | August 31, 2017
|  | Amount |  | Percent of Pretax Income |  | Amount |  | Percent of Pretax Income
Provision for (benefit from) income taxes at federal statutory rate |  | $ | (144,312 | ) |  | 21.00 | % |  | $ | 729,604 |  |  | 34.00 | %
Increases in taxes resulting from: |  |  |  |  |  |  |  |  |  |
State income taxes, net of federal income tax benefit |  | (21,509 | ) |  | 3.13 | % |  | 62,231 |  |  | 2.90 | %
Change in tax rate related to future deferred tax benefits |  | 3,150,147 |  |  | (458.40 | )% |  | — |  |  | — | %
Non-deductible expenses and other adjustments |  | 45,125 |  |  | (6.57 | )% |  | 91,075 |  |  | 4.24 | %
Provision for income taxes at effective rate |  | $ | 3,029,451 |  |  | (440.84 | )% |  | $ | 882,910 |  |  | 41.14 | %

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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