INCOME TAXES:

12 Months Ended

Oct. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES:

NOTE 7 - INCOME TAXES:

The Company’s (benefit) for income taxes in 2023 and 2022 consisted of the following:

	2023			2022
Current
Federal	$	-		$	-
State and local		-			-
		-			-
Deferred
Federal		(223,120	)		(933,489	)
State and local		(45,100	)		(62,304	)
		(268,220	)		(995,793	)
Income tax (benefit)	$	(268,220	)	$	(995,793	)

COFFEE HOLDING CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2023 AND 2022

NOTE 7 - INCOME TAXES (cont’d):

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:

	2023			2022
(Benefit) from for tax at the federal statutory rate	$	(231,797	)	$	(1,175,507	)
Goodwill impairment		-			265,796
Other permanent differences		(51,500	)		135,025
Return to provision		51,500			-
State and local tax, net of federal		(36,423	)		(221,107	)
(Benefit from) income taxes	$	(268,220	)	$	(995,793	)
Effective income tax rate		25	%		18	%

The tax effects of the temporary differences that give rise to the deferred tax assets and liabilities as of October 31, 2023 and 2022 are as follows:

	2023		2022
Deferred tax assets:
Accounts receivable	$	34,539	$	34,547
Unrealized loss		-		173,058
Deferred rent		28,483		15,643
Deferred compensation		28,908		58,355
Net operating loss		1,039,047		547,570
Stock-based compensation		602,107		602,237
Inventory		105,794		107,298
Total deferred tax asset		1,838,878		1,538,708
Deferred tax liabilities:
Intangible assets acquired		70,021		70,021
Unrealized gain		-		-
Buildings, machinery and equipment		427,450		395,500
Total deferred tax liabilities		497,471		465,521
Net deferred tax asset	$	1,341,407	$	1,073,187

A valuation allowance was not provided at October 31, 2023 or 2022. 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.

COFFEE HOLDING CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2023 AND 2022

NOTE 7 - INCOME TAXES (cont’d):

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, 2023 and 2022, 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, 2023 and 2022, 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, Florida, Idaho, Illinois, Kansas, Louisiana, Michigan, Massachusetts, Montana, New Jersey, New York, New York City, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas,and Virginia 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 2020. The Company’s California, Colorado and New Jersey and Texas income tax returns are no longer subject to examination by their respective taxing authorities for the years before fiscal 2020. The Company’s Oregon, New York, Kansas, South Carolina, Rhode Island, Connecticut and Michigan income tax returns are no longer subject to examination by their respective taxing authorities for the years before fiscal 2020.

As of October 31, 2023, and 2022, the Company had cumulative net operating loss carryforwards of approximately $3,641,178 and $2,281,518 respectively, $213,704 of which begin to expire in 2038 and $3,427,474 of the net operating loss carryforwards that do not expire. In accordance with Section 382 of the Internal Revenue code, the usage of $213,704 of the Company’s net operating loss carryforwards is subject to an annual limitation of $60,469, the remaining operating loss carryforwards of $3,427,474 have no such limitations. These net operating loss carryforwards may be further limited in the event of a change in ownership.