Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.25.0.1
Income Taxes
 12 Months Ended
Nov. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 9 - INCOME TAXES

The Company recorded the following income tax provision for the years ended November 30, 2024 and 2023.

 

 

 

2024

 

 

2023

 

Current:

 

 

 

 

 

 

Federal

 

$

2,085,000

 

 

$

1,862,000

 

State

 

 

626,000

 

 

 

1,046,000

 

Foreign

 

 

—

 

 

 

—

 

     Subtotal

 

 

2,711,000

 

 

 

2,908,000

 

Deferred:

 

 

 

 

 

 

Federal

 

 

(1,190,000

)

 

 

(4,945,000

)

State

 

 

881,000

 

 

 

(1,806,000

)

Foreign

 

 

—

 

 

 

—

 

     Subtotal

 

 

(309,000

)

 

 

(6,751,000

)

Income tax expense (benefit)

 

$

2,402,000

 

 

$

(3,843,000

)

 

As of November 30, 2024 and 2023, the tax effects of temporary differences that give rise to the deferred tax assets are as follows:

 

 

 

2024

 

 

2023

 

Tax assets:

 

 

 

 

 

 

Deferred income (net of discounts)

 

$

12,954,000

 

 

$

11,945,000

 

Tax over book basis in unconsolidated affiliate

 

 

1,272,000

 

 

 

1,268,000

 

Accrued payroll

 

 

444,000

 

 

 

465,000

 

Reserves and other accruals

 

 

3,661,000

 

 

 

3,585,000

 

Stock compensation

 

 

452,000

 

 

 

578,000

 

Depreciation and amortization

 

 

3,348,000

 

 

 

3,938,000

 

Transaction costs

 

 

19,000

 

 

 

20,000

 

RSA buy-out

 

 

883,000

 

 

 

1,097,000

 

Lease liability

 

 

248,000

 

 

 

305,000

 

Unrealized (gain) loss on securities

 

 

(55,000

)

 

 

105,000

 

Section 174 costs

 

 

505,000

 

 

 

268,000

 

Total Assets:

 

 

23,731,000

 

 

 

23,574,000

 

Tax Liabilities:

 

 

 

 

 

 

Other

 

 

(1,211,000

)

 

 

(1,273,000

)

Right-of-use asset

 

 

(214,000

)

 

 

(292,000

)

Total liabilities

 

 

(1,425,000

)

 

 

(1,565,000

)

Less: valuation allowance

 

 

(1,504,000

)

 

 

(1,516,000

)

Net deferred tax asset

 

$

20,802,000

 

 

$

20,493,000

 

 

 

A valuation allowance covering the deferred tax assets of the Company for November 30, 2024 and November 30, 2023 has been provided as the Company does not believe it is more likely than not that all of the future income tax benefits will be realized. The valuation allowance changed by approximately ($12,000) and ($6,000) during the years ended November 30, 2024 and 2023, respectively. The change for year ended November 30, 2024 and 2023 was primarily due to changes in state statutory rates.

The Company evaluates the recoverability of our deferred tax assets as of the end of each quarter, weighing all positive and negative evidence, and are required to establish and maintain a valuation allowance for these assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which the evidence can be objectively verified. If negative evidence exists, positive evidence is necessary to support a conclusion that a valuation allowance is not needed.

A reconciliation of the income tax provision with the amount of tax computed by applying the federal statutory rate to pretax income follows:

 

 

 

For the Years Ended November 30

 

 

 

2024

 

 

%

 

 

2023

 

 

%

 

Tax at federal statutory rate

 

 

588,866

 

 

 

21.00

 

 

 

(2,806,544

)

 

 

21.00

 

State income tax effect

 

 

239,410

 

 

 

8.53

 

 

 

(924,411

)

 

 

6.92

 

Change in valuation allowance

 

 

(12,097

)

 

 

(0.43

)

 

 

5,869

 

 

 

(0.04

)

Tax compensation differences

 

 

139,893

 

 

 

4.99

 

 

 

94,115

 

 

 

(0.70

)

Permanent disallowances

 

 

48,811

 

 

 

1.74

 

 

 

50,322

 

 

 

(0.38

)

Deferred repricing

 

 

1,314,454

 

 

 

46.88

 

 

 

(98,419

)

 

 

0.74

 

Other

 

 

—

 

 

 

—

 

 

 

41,220

 

 

 

(0.32

)

Uncertain tax position

 

 

(4,213

)

 

 

(0.15

)

 

 

(204,978

)

 

 

1.53

 

Prior period adjustment

 

 

86,902

 

 

 

3.10

 

 

 

—

 

 

 

—

 

Total income taxes

 

$

2,402,026

 

 

 

85.66

 

 

$

(3,842,826

)

 

 

28.75

 

$1,314,454 of the income tax expense for the twelve months ended November 30, 2024, is attributable to the impact of the state of Florida revenue apportionment methodology change.

 

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Increases or decreases to the unrecognized tax benefits could result from management’s belief that a position can or cannot be sustained upon examination based on subsequent information or potential lapse of the applicable statute of limitation for certain tax positions.

 

The following are our unrecognized tax benefits as of November 30, 2024:

 

Unrecognized tax benefits - December 1

 

 

70,000

 

Increases in prior year positions

 

 

—

 

Reversals of prior year positions

 

 

(70,000

)

Increases in tax positions taken in current year

 

 

—

 

Statute expirations

 

 

—

 

Unrecognized tax benefits - November 30

 

 

—

 

 

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

 

There was approximately $2,717,000 and $1,821,000 of U.S. income taxes paid for fiscal years ended November 30, 2024 and November 30, 2023, respectively.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. The table below summarizes the open tax years and ongoing tax examinations in major jurisdictions as of November 30, 2024:

 

Jurisdiction

 

Open Tax Years

 

Examinations in Process

United States – Federal Income Tax

 

2021 – 2023

 

N/A

United States – Various States

 

2020 - 2023

 

N/A