2. Basis of Presentation and Significant Accounting Policies: Income Taxes (Policies)

9 Months Ended

Jul. 31, 2019

Policies

Income Taxes

Income Taxes

On December 22, 2017, the U.S. government enacted comprehensive tax reform commonly referred to as the Tax Cuts and Jobs Act (“TCJA”).  Under Accounting Standards Codification (“ASC”) 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted.  The TCJA made broad and complex changes to the U.S. tax code, including, but not limited to: (1) reduction of the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018; (2) changes to the rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (3) acceleration of expensing certain qualified property; (4) creation of a new limitation on deductible interest expense (i.e., 30% of tax adjusted EBITDA through 2021 and then 30% of tax adjusted EBIT thereafter); (5) elimination of the corporate alternative minimum tax; and (6) imposition of further limitations on the deductibility of executive compensation under IRC §162(m) for tax years beginning after December 31, 2017. 

As the reduction in the U.S. federal corporate tax rate was administratively effective on January 1, 2018, our blended U.S. federal tax rate for the fiscal year ended October 31, 2018, was approximately 23.2%. The U.S. federal corporate tax rate for the fiscal year ended on and after October 31, 2019 is 21%.  Given our full valuation allowance position, the Company did not record an income tax expense (benefit) in connection with the TCJA.  The Company completed its accounting for the TCJA as of October 31, 2018.

The Company’s provision for income taxes consists of federal and state taxes, as applicable, in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year. For both the three and nine months ended July 31, 2019 and 2018, the Company did not record an income tax provision (benefit).  The Company is projecting its annual effective tax rate for the nine months ended July 31, 2019 to be 0% as its net deferred tax assets are not realizable on a more-likely-than-not basis.