Income Taxes

12 Months Ended

Oct. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

(8) Income Taxes

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

	2017			2016
Current income tax (benefit) provision:
Federal	$	41,245		$	(117,969	)
State		3,926			(15,007	)
		45,171			(132,975	)
Deferred income tax (benefit) provision:
Federal		(1,491	)		17,810
State		(138	)		1,654
		(1,629	)		19,464
Income tax (benefit) provision	$	43,542		$	(113,512	)

The differences between income taxes as provided at the federal statutory tax rate of 34% and the Company’s actual income taxes are as follows:

	2017		2016
Expected federal income tax expense at Statutory rate	$	39,747	$	(7,855	)
State income tax expense, net of federal income tax effect		2,441		(52	)
Other – meals and entertainment		1,354		6,988
DPAD adjustments		—		(112,594	)
Income tax provision	$	43,542	$	113,512

Tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. As of October 31, 2017 and 2016, the net deferred tax assets were $37,348 and $35,719, respectively. The Company determined it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets of October 31, 2017 and 2016 and no valuation allowance is deemed necessary. The realization of deferred tax assets will depend on the Company’s ability to continue to generate taxable income in the future.

During 2016, the Company was eligible for the domestic production activities deduction (DPAD) and subsequently claimed the deduction. The Company also amended the tax returns for 2012 and 2013, resulting in a refund and adjustment to the tax provision of approximately $112,000 for the year ended October 31, 2016.

The significant components of the net deferred income taxes at October 31, 2017 and 2016 are as follows:

	2016		2016
Deferred tax assets
Inventory reserve	$	84,646	$	70,238
Other reserves and allowances		54,516		111,510
Capitalized inventory costs		76,988		55,523
Total deferred tax assets		216,150		237,271
Deferred tax liabilities
Property, plant and equipment		178,802		201,552
Net deferred income taxes	$	37,348	$	35,719

For the years ended October 31, 2017 and 2016, 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. Our evaluation was performed for the tax years ended October 31, 2013 through October 31, 2017, the tax years which remain subject to examination by tax jurisdictions as of October 31, 2017.

The Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into United States tax law on December 22, 2017. The Act makes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%, and changes in business-related exclusions, and deductions and credits. Preliminarily, the Company expects a significant reduction in the effective income tax rate and a reduction of net deferred income tax assets of approximately $10,000 as a result of the income tax rate reduction, with such changes being included in the Company’s financial statements beginning in the three months ending January 31, 2018.