Income Taxes

12 Months Ended

Oct. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

(8) Income Taxes

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

	2018			2017
Current income tax (benefit) provision:
Federal	$	112,510		$	41,245
State		15,217			3,926
		127,727			45,171
Deferred income tax (benefit) provision:
Federal		(21,270	)		(1,491	)
State		(2,877	)		(138	)
		(24,147	)		(1,629	)
Income tax (benefit) provision	$	103,580		$	43,542

The differences between income taxes as provided at the federal statutory tax rate of 34% and 21% and the Company’s actual income taxes are as follows:

	2018			2017
Expected federal income tax expense at Statutory rate	$	96,582		$	39,747
State income tax expense, net of federa income tax effect		9,981			2,441
Non-deductible items and perm. differences		9,511			1,354
DPAD adjustments/R&D credit		(12,494	)		—
Income tax provision	$	103,580		$	43,542

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, 2018 and 2017, the net deferred tax assets were $61,494 and $37,348 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, 2018 and 2017 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.

The significant components of the net deferred income taxes at October 31, 2018 and 2017 are as follows:

	2018		2017
Deferred tax assets
Inventory reserve	$	69,081	$	84,646
Other reserves and allowances		65,538		54,516
Capitalized inventory costs		49,777		76,988
Total deferred tax assets		184,396		216,150
Deferred tax liabilities
Property, plant and equipment		122,898		178,802
Net deferred income taxes	$	61,494	$	37,348

For the years ended October 31, 2018 and 2017, 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, 2014 through October 31, 2018, the tax years which remain subject to examination by tax jurisdictions as of October 31, 2018.

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. As a result, the Company recorded a reduction of net deferred income tax assets of approximately $10,000 during the first quarter of our fiscal year ending October 31, 2018.