v3.10.0.1

Income Taxes | 12 Months Ended
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Nov. 30, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES CCA files 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 November 30, 2018 and November 30, 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. The Company files federal and state income tax returns in jurisdictions with varying statutes of limitations. The 2014 through 2017 tax years remain subject to examination by federal and state tax authorities. The Company is not under examination by any federal and state tax authorities as of November 30, 2018. 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 23.9%, 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 NOTE 10 - INCOME TAXES (CONTINUED) 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 Company's accounting is complete as of November 30, 2018. 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 | % | 2.90 | %
Total | 36.45 | % | 23.90 | %
The deferred compensation amount is from the issuance of stock options (see Note 14 - Stock-Based Compensation), and will be realized in future years if the options are exercised. At November 30, 2018 and November 30, 2017, respectively, the Company had temporary differences arising from the following:
|  | November 30, 2018 |  | November 30, 2017
Type |  | Amount |  | Deferred Tax |  | Amount |  | Deferred Tax
Depreciation |  | $ | (379,909 | ) |  | $ | (90,802 | ) |  | $ | (378,580 | ) |  | $ | (137,992 | )
Reserve for bad debts |  | 10,489 |  |  | 2,507 |  |  | 6,629 |  |  | 2,416 |
Reserve for returns |  | 182,692 |  |  | 43,665 |  |  | 246,513 |  |  | 89,854 |
Accrued returns |  | 96,592 |  |  | 23,086 |  |  | 109,646 |  |  | 39,966 |
Reserve for obsolete inventory |  | 25,483 |  |  | 6,091 |  |  | 158,269 |  |  | 57,689 |
Vacation accrual |  | 81,005 |  |  | 19,361 |  |  | 70,856 |  |  | 25,827 |
Alternative minimum tax carry forward |  | — |  |  | 103,040 |  |  | — |  |  | 122,360 |
Research and development credit carry forward |  | — |  |  | 65,175 |  |  | — |  |  | — |
Deferred compensation |  | 351,764 |  |  | 84,075 |  |  | 487,061 |  |  | 177,534 |
Bonus obligations unpaid |  | 70,686 |  |  | 16,895 |  |  | 400,166 |  |  | 145,861 |
Charitable contributions |  | 245,650 |  |  | 58,713 |  |  | 305,633 |  |  | 111,403 |
Section 263A costs |  | 206,283 |  |  | 49,304 |  |  | 48,317 |  |  | 17,612 |
Loss carry forward |  | 24,277,762 |  |  | 5,768,532 |  |  | 24,279,259 |  |  | 8,849,789 |
Net deferred tax asset |  | $ | 25,168,497 |  |  | $ | 6,149,642 |  |  | $ | 25,733,769 |  |  | $ | 9,502,319 |
The amounts recognized in the deferred tax asset are management's best estimate of the amount more likely than not to be realized and the actual results could differ from those estimates. In determining the amount more likely than not to be realized, management considered all available information. Future profitability in this competitive industry depends on the successful execution of management's initiatives designed to obtain sales levels and improve operating NOTE 10 - INCOME TAXES (CONTINUED) results. The inability to successfully execute these initiatives could reduce estimates of future profitability, which could affect the Company's ability to realize the deferred tax assets. A substantial portion of the deferred tax asset is the loss carry forward as a result of losses incurred by the Company is fiscal 2015 and earlier periods. If the Company does not meet its objectives, it could also result in taking a longer period of time for the net operating loss carry forward to be utilized. Income tax expense (benefit) is made up of the following components:
|  | November 30,
|  | 2018 |  | 2017 |
Current tax - Federal |  | $ | 17,382 |  |  | $ | 105,770 |  |
Current tax - State and Local |  | 10,210 |  |  | 5,640 |  |
Deferred tax expense |  | 3,352,676 |  |  | 1,062,144 |  |
|  | $ | 3,380,268 |  |  | $ | 1,173,554 |  |
Prepaid and refundable income taxes are made up of the following components:
Prepaid and refundable income taxes |  | Federal |  | State and Local |  | Total
November 30, 2018 |  | $ | 20,335 |  |  | $ | 5,468 |  |  | $ | 25,803 |
November 30, 2017 |  | $ | 1,015 |  |  | $ | 37,138 |  |  | $ | 38,153 |
A reconciliation of the (benefit from) provision for income taxes computed at the statutory rate to the effective rate for the years ended November 30, 2018 and 2017 is as follows:
|  | 2018 |  | 2017 |
|  | Amount |  | Percent of Pretax Income |  | Amount |  | Percent of Pretax Income |
Provision for (benefit from) income taxes at federal statutory rate |  | $ | 12,285 |  |  | 21.00 | % |  | $ | 1,021,610 |  |  | 34.00 | % |
Changes in provision for (benefit from) income taxes resulting from: |  |  |  |  |  |  |  |  |
State income taxes, net of federal income tax benefit |  | 1,697 |  |  | 2.90 | % |  | 73,616 |  |  | 2.45 | % |
Change in tax rate related to future deferred tax benefits |  | 3,146,636 |  |  | 5,378.68 | % |  | — |  |  | — | % |
Non-deductible expenses and other adjustments |  | 219,650 |  |  | 375.46 | % |  | 78,328 |  |  | 2.61 | % |
Provision for (benefit from) income taxes at effective rate |  | $ | 3,380,268 |  |  | 5,778.04 | % |  | $ | 1,173,554 |  |  | 39.06 | % |

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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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