7. FEDERAL INCOME TAXES

12 Months Ended

May 31, 2014

Income Tax Disclosure [Abstract]

FEDERAL INCOME TAXES

Deferred taxes as of May 31, 2014 and 2013 are as follows:

	2014		2013
Net operating loss carryforward	$	1,936,834	$	1,965,370
Depreciation and amortization, financial
reporting in excess of tax		219,838		443,177
Deferred compensation accrual		-		244,800
Stock compensation costs		36,328		18,164
Allowance for doubtful accounts		17,000		34,000
		2,210,000		2,705,511
Valuation allowance		-		(1,546,511	)
Net deferred tax asset	$	2,210,000	$	1,159,000

Deferred tax assets were classified in the consolidated balance sheets at May 31, as follows:

	2014		2013
Deferred tax assets - current	$	1,077,000	$	-
Deferred tax assets - non-current		1,133,000		1,159,000
Deferred tax assets - total	$	2,210,000	$	1,159,000

In assessing the reliability of deferred tax assets, management considers the likelihood of whether it is more likely than not the net deferred tax asset will be realized. Based on this evaluation, management has reduced the valuation allowance which allows for recognition of the tax benefits as deferred tax assets for May 31, 2014 and 2013, respectively.

The net change in deferred taxes for the year ended May 31, 2014 and 2013 is as follows:

		2014			2013
Net operating loss carryforward	$	(28,536	)	$	(583,561	)
Depreciation and amortization, financial
reporting in excess of tax		(223,339	)		(174,289	)
Stock compensation costs		18,164			18,164
Deferred compensation accrual		(244,800	)		-
Allowance for doubtful accounts		(17,000	)		17,000
Valuation allowance		1,546,511			1,296,686
Total	$	1,051,000		$	574,000

The provision (benefit) for income taxes at May 31 consists of the following:

	2014			2013
Federal	$	11,000		$	26,000
Deferred income tax benefit		(1,051,000	)		(574,000	)
Total	$	(1,040,000	)	$	(548,000	)

Greystone's provision (benefit) for income taxes for the years ended May 31, 2014 and 2013 differs from the federal statutory rate as follows:

	2014			2013
Tax provision (benefit) using statutory rates		34	%	34	%
Net change in valuation allowance		(75	)	(54	)
Other		(9	)	(11	)
Tax benefit per financial statements		(50	)%	(31	)%

At May 31, 2014, Greystone had a net operating loss (NOL) for Federal income tax purposes from inception through May 31, 2005 of $17,243,600 expiring in fiscal year 2014 through fiscal year 2025 of which $2,475,000 is management’s estimate of the usable amount pursuant to Internal Revenue Code Section 382. The limitation is due to a change in control of Greystone during the fiscal year ended May 31, 2005. The utilization of NOL’s accumulated through fiscal year 2005 is limited to approximately $225,000 per year.

	NOL Carryforward		Year Expiring
Cumulative as of May 31, 2005	$	2,475,000		2015 - 2025
Year ended May 31, 2006		323,133		2026
Year ended May 31, 2007		2,151,837		2027
Year ended May 31, 2011		746,484		2031

Greystone is no longer subject to income tax examinations by tax authorities for years prior to fiscal year 2006.

Greystone does not have any uncertain tax positions that could result in a material change to its financial position.