Note

– Income Taxes

The components of the Company’s current (benefit)/provision for income taxes are as follows:

	2019			2018
Current
Federal	$	(17,181	)	$	23,000
State		(5,819	)		7,000
Deferred		48,000			-
Total	$	25,000		$	30,000

The decrease in the deferred tax asset was due to a change in the expected use of NOLs that will be expiring in

2020

through

2029.

The reduction in current year expense is related to a reduction in current year tax liabilities.

The effective tax rate used to compute income tax expense and deferred tax assets and liabilities is a federal rate of

21%

and a state rate of

7.11%,

net of the federal tax effect.

A reconciliation of the expected income tax expense to the recorded income tax expense is as follows for the years ended

November 30:

	2019			2018

Federal income tax provision computed at federal statutory rate	$	100,155		$	113,705
State income taxes, net of federal tax provision		33,910			38,497
Change in valuation allowance, tax rate and other adjustments		(109,065	)		(122,202	)
Income Tax Provision	$	25,000		$	30,000

The components of the Company’s deferred tax assets and liabilities for federal and state income taxes consist of the following:

	2019			2018
Deferred revenue	$	39,507		$	20,709
Marketing Fund net contributions		112,562			124,798
Allowance for doubtful accounts and notes receivable		6,969			11,069
Accrued expenses		44,582			31,688
Operating lease liability		126,883			140,000
Net operating loss carryforwards		475,380			637,359
Valuation allowance		(28,500	)		(115,824	)
Total Deferred Income Tax Asset	$	777,383		$	849,799

Depreciation and amortization	$	(469,396	)	$	(466,650	)
Right of use lease asset		(107,987	)		(135,149	)
Total Deferred Income Tax Liabilities	$	(577,383	)	$	(601,799	)

Total Net Deferred Tax Asset	$	200,000		$	248,000

As of

November 30, 2019

the Company has net operating loss carryforwards of approximately

$1,691,000

expiring between

2020

and

2029

for U.S. federal income tax purposes. There are

remaining net operating loss carryforwards to be utilized for state taxes. The Company routinely reviews the future realization of tax assets based on projected future reversals of taxable temporary differences, available tax planning strategies and projected future taxable income. A valuation allowance has been established for

$29,000

and

$116,000

as of

November 30, 2019

and

2018,

respectively, for the deferred tax benefit related to those loss carryforwards that are more likely than

not

that the deferred tax asset will

not

be realized.

The Company’s income tax returns, which are filed as a consolidated return under Inc. for the years ending

November 30, 2016,

2017

and

2018

are subject to examination by the IRS and corresponding states, generally for

three

years after they are filed.