Income Taxes

12 Months Ended

Oct. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 9 - INCOME TAXES:

The Company’s provision for income taxes in 2017 and 2016 consisted of the following:

	2017			2016
Current
Federal	$	392,354		$	219,562
State and local		35,717			155,083
		428,071			374,645
Deferred
Federal		(199,550	)		941,150
State and local		15,575			50,125
		(183,975	)		991,275
Income tax (benefit) expense	$	244,096		$	1,365,920

A reconciliation of the difference between the expected income tax rate using the statutory U.S. federal tax rate and the Company’s effective tax rate is as follows:

	2017			2016
Tax at the federal statutory rate of 34%	$	241,862		$	1,263,427
Other permanent differences		(21,289	)		(32,944	)
State and local tax, net of federal		23,523			135,437
Provision for income taxes	$	244,096		$	1,365,920
Effective income tax rate		34	%		37	%

The tax effects of the temporary differences that give rise to the deferred tax assets and liabilities as of October 31, 2017 and 2016 are as follows:

	2017		2016
Current deferred tax assets:
Accounts receivable	$	57,904	$	67,034
Unrealized loss		138,963
Inventory		142,881		64,384
Total current deferred tax asset	$	339,748	$	131,418
Non-current deferred tax assets:
Deferred rent		96,659		107,635
Deferred compensation		196,443		227,947
Total non-current deferred tax asset	$	293,102	$	335,582
Total deferred tax asset	$	632,850	$	467,000
Current deferred tax liability:
Unrealized gain	$		$	49,873
Non-current deferred tax liability:
Intangible assets acquired		387,982
Fixed assets		534,800	$	503,052
Total deferred tax liabilities	$	922,782	$	552,925

A valuation allowance was not provided at October 31, 2017 or 2016. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are expected to be deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced.

As of October 31, 2017 and 2016, the Company did not have any unrecognized tax benefits or open tax positions. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of October 31, 2017 and 2016, the Company had no accrued interest or penalties related to income taxes. The Company currently has no federal or state tax examinations in progress.

The Company files a U.S. federal income tax return and California, Colorado, Connecticut, Idaho, Kansas, Michigan, New Jersey, New York, New York City, Virginia, Texas, Rhode Island, South Carolina, and Oregon state tax returns. The Company’s federal income tax return is no longer subject to examination by the federal taxing authority for years before fiscal 2014. The Company’s California, Colorado and New Jersey income tax returns are no longer subject to examination by their respective taxing authorities for the years before fiscal 2011. The Company’s Oregon, New York, Kansas, South Carolina, Rhode Island, Connecticut and Michigan and Texas income tax returns are no longer subject to examination by their respective taxing authorities for the years before fiscal 2012.