Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.24.0.1
Income Taxes
 12 Months Ended
Nov. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 9 - INCOME TAXES

The Company recorded the following income tax provision for the years ended November 30, 2023 and 2022.

 

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

Federal

 

$

1,862,000

 

 

$

1,714,000

 

State

 

 

1,046,000

 

 

 

566,000

 

     Subtotal

 

 

2,908,000

 

 

 

2,280,000

 

Deferred:

 

 

 

 

 

 

Federal

 

 

(4,945,000

)

 

 

(1,218,000

)

State

 

 

(1,806,000

)

 

 

(514,000

)

     Subtotal

 

 

(6,751,000

)

 

 

(1,732,000

)

Income tax (benefit) expense

 

$

(3,843,000

)

 

$

548,000

 

 

As of November 30, 2023 and 2022, the tax effects of temporary differences that give rise to the deferred tax assets are as follows:

 

 

 

2023

 

 

2022

 

Tax assets:

 

 

 

 

 

 

Deferred income (net of discounts)

 

$

11,945,000

 

 

$

10,081,000

 

Tax over book basis in unconsolidated affiliate

 

 

1,268,000

 

 

 

1,252,000

 

Accrued payroll

 

 

465,000

 

 

 

335,000

 

Reserves and other accruals

 

 

3,585,000

 

 

 

2,524,000

 

Stock compensation

 

 

578,000

 

 

 

475,000

 

Depreciation and amortization

 

 

3,938,000

 

 

 

213,000

 

Transaction costs

 

 

20,000

 

 

 

20,000

 

RSA buy-out

 

 

1,097,000

 

 

 

1,236,000

 

Lease liability

 

 

305,000

 

 

 

171,000

 

Unrealized loss on securities

 

 

105,000

 

 

 

69,000

 

Section 174 costs

 

 

268,000

 

 

 

—

 

Total Assets:

 

 

23,574,000

 

 

 

16,376,000

 

Tax Liabilities:

 

 

 

 

 

 

Other

 

 

(1,273,000

)

 

 

(955,000

)

Right-of-use asset

 

 

(292,000

)

 

 

(169,000

)

Total liabilities

 

 

(1,565,000

)

 

 

(1,124,000

)

Less: valuation allowance

 

 

(1,516,000

)

 

 

(1,510,000

)

Net deferred tax asset

 

$

20,493,000

 

 

$

13,742,000

 

 

A valuation allowance covering the deferred tax assets of the Company for November 30, 2023 and November 30, 2022 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 ($6,000) and $9,000 during the years ended November 30, 2023 and 2022, respectively. The change for year ended November 30, 2023 and 2022 was primarily due to changes in state statutory rates and expiration of capital loss carryovers.

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

 

 

 

2023

 

 

%

 

 

2022

 

 

%

 

Tax at federal statutory rate

 

 

(2,806,544

)

 

 

21.00

 

 

 

696,979

 

 

 

21.00

 

State income tax effect

 

 

(924,411

)

 

 

6.92

 

 

 

50,556

 

 

 

1.52

 

Change in valuation allowance

 

 

5,869

 

 

 

(0.04

)

 

 

(8,865

)

 

 

(0.27

)

Tax compensation differences

 

 

94,115

 

 

 

(0.70

)

 

 

15,313

 

 

 

0.46

 

Permanent disallowances

 

 

50,322

 

 

 

(0.38

)

 

 

8,266

 

 

 

0.25

 

Deferred repricing

 

 

(98,419

)

 

 

0.74

 

 

 

(126,306

)

 

 

(3.81

)

Other

 

 

41,220

 

 

 

(0.32

)

 

 

(8,376

)

 

 

(0.24

)

Uncertain tax position

 

 

(204,978

)

 

 

1.53

 

 

 

(80,027

)

 

 

(2.41

)

Total income taxes

 

$

(3,842,826

)

 

 

28.75

 

 

$

547,540

 

 

 

16.50

 

 

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

 

There was approximately $1,821,000 and $1,573,000 of U.S. income taxes paid for fiscal years ended November 30, 2023 and November 30, 2022, 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, 2023:

 

Jurisdiction

 

Open Tax Years

 

Examinations in Process

United States – Federal Income Tax

 

2020 – 2022

 

N/A

United States – Various States

 

2019 - 2022

 

N/A