Federal Income Taxes

12 Months Ended

Jan. 31, 2016

Income Tax Disclosure [Abstract]

Federal Income Taxes

17. FEDERAL INCOME TAXES

The Trust and subsidiaries have income tax net operating loss carry forwards of approximately $9.3 million at January 31, 2016. In 2005, the Trust had an ownership change within the meaning of Internal Revenue Code Section 382. However, the Trust determined that such ownership change would not have a material impact on the future use of the net operating losses.

The Trust and subsidiaries have federal and state net operating loss carryforwards of approximately $8.4 million at January 31, 2015, having expiration dates ranging from fiscal years 2019 to 2033.

Total and net deferred income tax assets at January 31,	2016			2015
Net operating loss carryforwards	$	2,795,000		$	2,166,000
Bad debt allowance		(13,000	)		(12,000	)
Accrued expenses		76,000			81,000
Syndications		5,128,000			4,370,000
Prepaid insurance		23,000			8,000
Alternative minimum tax credit		91,000			91,000
Total deferred income tax assets		8,100,000			6,704,000
Deferred income tax liability associated with book/tax differences in hotel properties		(2,598,000	)		(2,472,000	)
Net deferred income tax asset		5,502,000			4,232,000
Valuation allowance		(5,502,000	)		(4,232,000	)
Net deferred income tax asset	$	-		$	-

The differences between the statutory and effective tax rates are as follows for the year ended January 31, 2016:

Federal statutory rates	$	(112,000	)	-34	%
State income taxes		(25,000	)	-7	%
Change in valuation allowance		1,270,000		67	%
True-ups to prior year return		(1,016,000	)	-33	%
Other		(21,000	)	-1	%
Effective rate	$	96,000		-10	%

The differences between the statutory and effective tax rates are as follows for the year ended January 31, 2015:

Federal statutory rates	$	(694,000	)	-34	%
State income taxes		(141,000	)	-7	%
Change in valuation allowance		636,000		67	%
Effective rate	$	(199,000	)	-10	%

The true-ups to prior year return related primarily to the sale of syndication units in the Trust’s subsidiaries which are treated as equity transactions in the Trust’s financial statements but are taxed as capital gain transactions and total $1,079,000, causing the utilization of net operating loss carry forwards totaling $963,000, which were then offset by the release of valuation allowances. The Trust’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Trust had no accrued interest or penalties at January 31, 2016 and 2015.