Note 8 - Income Tax

12 Months Ended

Oct. 31, 2020

Income Tax Disclosure [Abstract]

Income Tax

Note 8 – Income Tax

The Company is subject to federal income taxes and state income tax in the U.S. Significant judgment is required in determining the provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017 and reduced the U.S. federal corporate tax rate from 35% to 21%, eliminated corporate Alternative Minimum Tax, modified rules for expensing capital investment, and limited the deduction of interest expense for certain companies. The Company fulfilled and shipped all of the Products from Florida and, thus, it is subject to the state corporate income tax of Florida with a tax rate of 4.458%. There is no difference from the income tax computed at the combined federal and state statutory rate to the income tax effective rate.

During the year ended October 31, 2020, the Company generated taxable income of $5,950,117 and, thus, accrued $1,249,525 of federal income tax. Estimated state income tax of $182,925 was paid to the state of Florida based on taxable income for the nine months ended July 31, 2020. The accrued expense for state taxes was $82,331 at October 31, 2020.

The income tax provision contains the following components:

	October 31,
	2020		2019
Current tax expense:
Federal	$	1,249,525	$	—
State		265,256		—
Total current tax expense		1,514,781		—
Estimated tax payments:
Federal		—		—
State		182,925		—
Total estimated tax payment		182,925		—
Net income tax liability	$	1,331,856	$	—

Significant components of the Company’s deferred tax assets and liabilities as of October 31, 2020 and October 31, 2019 after applying enacted corporate income tax rate, is net operating loss carryforward of $0 and $15,377, and a valuation allowance of $0 and $15,377, respectively, which is a total deferred tax asset of $0. The Company’s tax returns for 2018 and 2019 remain open to examination.

Significant components of the Company's deferred tax assets and liabilities are as follows:

	October 31,
	2020		2019
Deferred tax asset
Net operating loss carry-forward	$	—	$	15,377
Total deferred tax asset		—		15,377
Less: Valuation allowance		—		(15,377	)
Net Deferred tax asset		—		—