Income Taxes

9 Months Ended

Aug. 31, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE I – 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:

	August 31,			November 30,
	2020			2019
Deferred Tax Assets
Net operating loss	$	1,287,289		$	1,524,286
Allowance for bad debts		29,921			27,121
Inventory		60,746			60,746
Other		85,562			65,353
Depreciation		64,074			65,402
Total deferred tax assets		1,527,592			1,742,908
Valuation allowance		(522,159	)		(557,168	)
Deferred Tax Assets	$	1,005,433		$	1,185,740

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 $35,009 during the nine months ended August 31, 2020. 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:

	Nine Months Ended
	August 31, 2020		August 31, 2019
Current:
Federal	$	-	$	(38,519	)
States		31,529		71,678
		31,529		33,159
Deferred:
Federal		142,442		(126,275	)
States		37,865		(33,567	)
		180,307		(159,842	)
Provision for income taxes	$	211,836	$	(126,683	)

The Company files a consolidated income tax return with its wholly-owned subsidiaries and has net operating loss carryforwards of approximately $5,751,000 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: 

	Nine Months ended
	August 31,			August 31,
	2020			2019
U.S Federal Income tax statutory rate		21	%		21	%
Valuation allowance		4	%		(32	)%
State income taxes		5	%		4	%
Other		-			-
Effective tax rate		30	%		(7	)%