Income Taxes

12 Months Ended

Nov. 06, 2021

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 10 Income Taxes

The Company computes income tax expense using the liability method. Under this method, deferred income taxes are provided, to the extent considered realizable by management, for basis differences of assets and liabilities for financial reporting and income tax purposes.

The Company follows guidance issued by the FASB with respect to accounting for uncertainty in income taxes. A tax position is recognized as a benefit only if it is “more-likely-than-not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more-likely-than-not” test, no tax benefit is recorded.

The Company and its subsidiaries are subject to U.S. federal income tax, as well as income tax of the state of Florida. The Company’s income tax returns for the past three years are subject to examination by tax authorities, and may change upon examination.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense. The Company did not reflect any amounts for interest and penalties in its 2021 or 2020 statements of operations, nor are any amounts accrued for interest and penalties at November 6, 2021 and October 31, 2020.

The provision for income taxes for the years ended consists of the following:

	November 6, 2021		October 31, 2020
Current tax expense:
Federal	$	1,327,166	$	1,524,703
State		289,593		283,877
Deferred tax (benefit)		103,166		76,807
Provision for income taxes	$	1,719,925	$	1,885,387

The following table shows the reconciliation between the statutory federal income tax rate and the actual provision for income taxes for the years ended:

	November 6, 2021			October 31, 2020
Provision—federal statutory tax rate	$	1,494,934		$	1,652,508
Increase (decrease) resulting from:
State taxes, net of federal tax benefit		250,708			277,135
Permanent differences:
Stock option expirations		—			—
Decrease in FL corporate tax rate		(135	)		(3,306	)
Other comprehensive income		—			—
Other		(25,582	)		(40,950	)
Provision for income taxes	$	1,719,925		$	1,885,387

The types of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts and the related deferred tax assets and deferred tax liabilities are as follows:

	November 6, 2021			October 31, 2020
Deferred tax assets:
Allowance for doubtful accounts	$	55,455		$	56,864
Inventories		—			46,790
Prepaid Expenses		14,295			—
Accrued expenses		107,893			112,999
Other assets		17,789			23,224
Lease right of use liability		382			196,839
Stock-based compensation		19,502			2,894
Total deferred tax assets		215,316			439,610
Deferred tax liabilities:
Depreciation		(135,466	)		(141,270	)
Carrying value of investments		(109,146	)		(47,435	)
Amortization		(37,374	)		(38,324	)
Prepaid expenses		(32,516	)		(33,562	)
Lease right of use asset		(382	)		(175,421	)
Net deferred tax assets (liabilities)	$	(99,568	)	$	3,598

These amounts are included in the accompanying consolidated balance sheets under the following captions:

	November 6, 2021			October 31, 2020
Current assets (liabilities):
Deferred tax assets	$	—		$	—
Deferred tax liabilities		—			—
Net current deferred tax assets		—			—
Non-current assets (liabilities):
Deferred tax assets		215,316			439,610
Deferred tax liabilities		(314,884	)		(436,012	)
Net non-current deferred tax assets (liabilities)		(99,568	)		3,598
Net deferred tax assets (liabilities)	$	(99,568	)	$	3,598

In assessing the ability to realize a portion of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. For fiscal years 2021 and 2020, the Company determined that a valuation reserve for the Company’s deferred tax assets was not considered necessary as the deferred tax assets were fully realizable.