INCOME TAXES

12 Months Ended

Oct. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

8.       INCOME TAXES

Income tax provision (benefit) consists of the following:

	Year Ended October 31,
	2021			2020
Federal:
Current	$	-		$	-
Deferred		604,000			404,000
State:
Current		-			-
Deferred		(129,000	)		(800,000	)
Adjustment to valuation allowance related to net deferred tax assets		(475,000	)		396,000
	$	-		$	-

The tax effects of temporary differences that give rise to significant portions of the deferred tax asset, net, at October 31, 2021 and 2020, are as follows:

	October 31,
	2021			2020
Long-term deferred tax assets:
Federal and state NOL and tax credit carryforwards	$	20,230,000		$	19,727,000
Deferred compensation		7,502,000			8,009,000
Intangibles		330,000			828,000
Other		219,000			192,000
Subtotal		28,281,000			28,756,000
Less: valuation allowance		(28,281,000	)		(28,756,000	)
Deferred tax asset, net	$	-		$	-

As of October 31, 2021, we had tax net operating loss and tax credit carryforwards of approximately $82,393,000 and $1,597,000, respectively, available within statutory limits (expiring at various dates between 2022 and 2041), to offset any future regular Federal corporate taxable income and taxes payable. If the tax benefits relating to deductions of option holders’ income are ultimately realized, those benefits will be credited directly to additional paid-in capital. Certain changes in stock ownership can result in a limitation on the amount of net operating loss and tax credit carryovers that can be utilized each year. As of October 31, 2021, management has not determined the extent of any such limitations, if any.

We had California tax net operating loss carryforwards of approximately $32,714,000 as of October 31, 2021, available within statutory limits (expiring at various dates between 2022 and 2041), to offset future corporate taxable income and taxes payable, if any, under certain computations of such taxes.

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have provided a valuation allowance against our deferred tax asset due to our current and historical pre-tax losses and the uncertainty regarding their realizability. The primary differences from the Federal statutory rate of 21% and the effective rate of 0% is attributable to expiring net operating losses and a change in the valuation allowance. The following is a reconciliation of income taxes at the Federal statutory tax rate to income tax expense (benefit):

	Year Ended October 31,
	2021					2020
Income tax benefit at U.S. Federal statutory income tax rate	$	(2,757,000	)	(21.00	)%	$	(2,119,000	)	(21.00	)%
State income taxes		(917,000	)	(6.98	)%		(705,000	)	(6.98	)%
Permanent differences		23,000		0.17	%		32,000		0.32	%
Expiring net operating losses, credits and other		4,126,000		31.43	%		2,396,000		23.74	%
Change in valuation allowance		(475,000	)	(3.62	)%		396,000		3.92	%
Income tax provision	$	-		0.00	%	$	-		0.00	%

During the two fiscal years ended October 31, 2021, we incurred no Federal and no State income taxes. We have no unrecognized tax benefits as of October 31, 2021 and 2020 and we account for interest and penalties related to income tax matters in general and administrative expenses. Tax years to which our net operating losses relate remain open to examination by Federal and California authorities to the extent which the net operating losses have yet to be utilized.