Income Taxes

12 Months Ended

Nov. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

9.       Income Taxes

The Company has accumulated net operating losses of $32 million and $33 million for United States federal tax purposes at November 30, 2014 and 2013, respectively, some of which may be limited in their utilization pursuant to Section 382 of the Internal Revenue Code, and which may not be available entirely for use in future years.  These losses expire in fiscal years 2020 through 2033.

Deferred income taxes reflect 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.  Significant components of the Company’s deferred tax assets and liabilities as of November 30, 2014 and 2013 were as follows:

	2014		2013
				See Note 3 for Restatement
Deferred tax assets, net:
Net operating loss carry forwards	$	10,930,000	$	9,233,000
Allowance for doubtful accounts		—		1,000
Accrued pension		680,000		648,000
Interest		560,000		1,078,000
Other		10,000		9,000
Total		12,180,000		10,969,000
Valuation allowance		12,180,000		10,969,000
Net deferred assets	$	—	$	—

The valuation allowance increased to $12,180,000 at November 30, 2014 from $10,546,841 at November 30, 2013.

The following is a reconciliation of the tax provisions for the years ended November 30, 2014 and 2013 with the statutory Federal income tax rates:

	Percentage of Pre-Tax Income
	2014			2013
Statutory federal income tax rate		34.0	%		34.0	%
Reduction of tax attributes due to discharge of indebtedness		(34.0	)		(34.0	)
Effective tax rate		—			—

Under Section 108(a) of the Internal Revenue Code, the gain of approximately $2,700,000 in fiscal 2013, which is attributable to debt forgiveness and settlement of liabilities, is not included in taxable income of the Company as the Company is deemed insolvent for tax purposes.  The Company’s net operating loss carry forwards have been reduced by the amount of non-taxable debt forgiveness in each year.

The Company did not have any material unrecognized tax benefits as of November 30, 2014 and 2013. The Company does not expect the unrecognized tax benefits to significantly increase or decrease within the next twelve months.  The Company recorded no interest and penalties relating to unrecognized tax benefits as of and during the years ended November 30, 2014 and 2013.  The Company is subject to United States federal income tax, as well as taxes by various state jurisdictions.  The Company is currently open to audit under the statute of limitations by the federal and state jurisdictions for the years ending November 30, 2011 through 2014.