Income Taxes

12 Months Ended

Oct. 31, 2021

(10) Income Taxes

Income tax provision attributable to income from continuing operations consists of:

Schedule of Income tax provision
	2021			2020
Current income tax (benefit) provision:
Federal	$	(97,992	)	$	(250,054	)
State		(3,211	)		57
Current income tax provision		(101,203	)		(249,997	)
Deferred income tax (benefit) provision:
Federal		(47,917	)		72,356
State		(7,203	)		10,876
Deferred income tax provision		(55,120	)		83,232
Income tax benefit	$	(156,323	)	$	(166,765	)

The differences between income taxes as provided at the federal statutory tax rate of 21% and the Company’s actual income taxes are as follows:

Schedule of actual income taxes
	2021			2020

Expected federal income tax expense at Statutory rate	$	(60,299	)	$	(120,788	)

State income tax expense, net of federal income tax effect		(21,720	)		(13,202	)
Non-deductible items and perm. differences		(128,385	)		6,101
Credits utilized and other adjustments		(38,213	)		(38,876	)
Increase in valuation allowance		92,294			0
Income tax benefit	$	(156,323	)	$	(166,765	)

Due to changes in the tax laws enacted in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, cumulative federal operating loss carryforwards (NOLs) of approximately $1,000,000 were carried back to prior periods resulting in income tax refunds of approximately $332,000 at October 31, 2020. For the period February 25 through October 31, 2021, the income tax return of the Company will be included in the consolidated income tax return of Avis. The Company is in the process of filing short-year income tax returns for the period November 1, 2020 through February 24, 2021 and is filing carryback claims for the same period to recover income taxes paid in prior periods of approximately $102,000. The Company has recorded cumulative federal and state income tax refunds due of approximately $434,000 at October 31, 2021.

Deferred tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. The realization of deferred tax assets, with the exception of certain tax credits and state NOLs, will depend on the ability of Avis to generate taxable income in the future. Certain tax credits and state NOLs of approximately $92,300 were generated by the Company prior to the Avis ownership change and may be subject to Section 382 limitations, accordingly, the Company has recorded a valuation allowance related to these deferred tax assets. The Company determined it is more likely than not that the remaining deferred tax assets will be realized in the consolidated tax return of Avis.

The significant components of the net deferred income taxes at October 31, 2021 and 2020 are as follows:

Schedule of deferred income taxes
	2021			2020
Deferred tax assets
Inventory reserve	$	66,037		$	53,860
Other reserves and allowances		44,902			36,509
Capitalized inventory costs		78,147			67,701
Tax credit and NOL carryforward		92,294			28,447
Provision for sales returns		114,745			—
Total deferred tax assets		396,125			186,517
Deferred tax liabilities
Property, plant and equipment		170,821			108,627
Net deferred income taxes		225,304			77,890

Less valuation allowance		(92,294	)		—
Net deferred income taxes net of valuation allowance	$	133,010		$	77,890

For the years ended October 31, 2021 and 2020, the Company did not have any unrecognized tax benefits or obligations as a result of tax positions taken during a prior period or during the current period. No interest or penalties have been recorded as a result of tax uncertainties. The evaluation was performed for the tax years which remain subject to examination by tax jurisdictions as of October 31, 2021.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

INTERNATIONAL BALER CORP 10-K