6. Income Taxes

12 Months Ended

Aug. 31, 2020

Notes

6. Income Taxes

6. INCOME TAXES 

A reconciliation of the provision for income taxes with amounts determined by applying the statutory U.S. federal income tax rate to income before income taxes is as follows:

	2020		2019
Computed tax at the federal statutory rate	$	807,223	$	605,466
State taxes, net of federal benefit		218,611		173,114
Depreciation		(33,518)		920
Inventory reserve		7,587		20,458
Other		68,980		8,383
Provision for income taxes	$	1,068,883	$	808,341
Current income taxes	$	1,068,883	$	808,341
Deferred income taxes		35,748		(20,649)
	$	1,104,631	$	787,692

Deferred income tax liability as of August 31, 2020 of $96,952 (August 31, 2019 – $61,204) reflects the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. 63854

	2020		2019
Deferred tax assets:
Allowance for inventory	$	92,999	$	83,243
Allowance for bad debts		-		-
Difference between book and tax depreciation		(51,892)		(6,388)
Total deferred tax assets		41,107		76,855
Valuation allowance		-		-
Net deferred tax assets		41,107		76,855
Net deferred tax liability		(138,059)		(138,059)
Combined net deferred tax liability	$	(96,952)	$	(61,204)