Note 10 - Income Taxes

6 Months Ended

Apr. 30, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 10 – Income taxes

We use an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate, to determine its quarterly provision (benefit) for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

We recorded income tax provisions of $648,000 and $3,000 for the three months ended April 30, 2021 and 2020, respectively. The effective tax rate was 24.2% for the three months ended April 30, 2021, compared to (1.4%) for the three months ended April 30, 2020. For the six months ended April 30, 2021 and 2020, we recorded income tax provisions (benefits) of $454,000 and ($11,000), respectively. The effective tax rate was 21.8% for the six months ended April 30, 2021, compared to 6.7% for the six months ended April 30, 2020. The effective tax rates for the three and six months ended April 30, 2021 are excluding the PPP Loan forgiveness classified in Other Income. The change in effective tax rate for the six months ended April 30, 2021 compared to the six months ended April 30, 2020 was primarily driven by the disproportionate impact of various permanent book-tax differences with respect to our forecasted book income or loss in each period.

We had $127,000 and $107,000 of unrecognized tax benefits, inclusive of interest and penalties, as of April 30, 2021 and October 31, 2020, respectively. The unrecognized tax benefits, if recognized, would result in a net tax benefit of $33,000 as of April 30, 2021.