Income Taxes

12 Months Ended

Nov. 30, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE J – INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using the enacted tax rates in effect in the years in which the differences are expected to reverse.  

The Company’s deferred income taxes are comprised of the following:

	November 30,			November 30,
	2018			2017
Deferred Tax Assets
Net operating loss	$	2,008,906		$	3,786,406
Allowance for bad debts		32,658			49,909
Inventory		69,757			92,225
Deferred rent		6,679			13,786
Other		62,071			-
Depreciation		73,140			115,752
Total deferred tax assets		2,253,211			4,058,078
Valuation allowance		(1,270,587	)		(3,075,198	)
Deferred Tax Assets	$	982,624		$	982,880

The valuation allowance for the deferred tax assets relates principally to the uncertainty of the utilization of deferred tax assets and was calculated in accordance with the provisions of ASC 740, which requires that a valuation allowance be established or maintained when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. The valuation allowance decreased by approximately $1,804,000 during the year ended November 30, 2018.  This valuation is based on management estimates of future taxable income. Although the degree of variability inherent in the estimates of future taxable income is significant and subject to change in the near term, management believes, that the estimate is adequate. The estimated valuation allowance is continually reviewed and as adjustments to the allowance become necessary, such adjustments are reflected in the current operations.

The Company’s income tax expense consists of the following:

	Years Ended
	November 30, 2018		November 30, 2017
Current:
Federal	$	41,094	$	-
States		99,642		27,399
		140,736		27,399
Deferred:
Federal		184		(55,940	)
States		72		(12,280	)
		256		(68,220	)
Provision for income taxes	$	140,992	$	(40,821	)

The Company files a consolidated income tax return with its wholly-owned subsidiaries and has net operating loss carryforwards of approximately $7,687,000 for federal and state purposes, which expire through 2020. A reconciliation of the difference between the expected income tax rate using the statutory federal tax rate and the Company’s effective rate is as follows: 

	Years ended
	November 30,			November 30,
	2018			2017
U.S Federal Income tax statutory rate		21	%		34	%
Valuation allowance		(21	)%		(56	)%
State income taxes		7	%		9	%
Other		-			-
Effective tax rate		7	%		(13	)%