|12 Months Ended|
Oct. 31, 2017
|Income Tax Disclosure [Abstract]|
NOTE 7 - INCOME TAXES
The Company files federal income tax returns in the U.S. and state income tax returns in the applicable states on a consolidated basis. The Company’s subsidiaries also file in the appropriate foreign jurisdictions as applicable, most notably the United Kingdom.
The Company is required to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The Company has no significant unrecognized tax benefit during the years ended October 31, 2017 and 2016. The Company also estimates that the unrecognized tax benefit will not change significantly within the next twelve months.
There are no material tax positions included in the accompanying consolidated financial statements at October 31, 2017 and 2016 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.
The Company uses an asset and liability approach to financial accounting and reporting for income taxes. The difference between the financial statement and tax bases of assets and liabilities is determined annually. Deferred income tax assets and liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the periods in which they are expected to affect taxable income. Valuation allowances are established, if necessary, to reduce the deferred tax asset to the amount that will more likely than not be realized. Income tax expense is the current income tax payable or refundable for the period plus or minus the net change in the deferred tax assets and liabilities.
For income tax reporting purposes, the Company’s aggregate U.S. unused net operating losses approximate $10,698,000 as of October 31, 2017, which expire beginning in 2026 through 2029, subject to limitations of Section 382 of the Internal Revenue Code, as amended. The deferred tax asset related to the U.S. tax carry-forward is approximately $4,172,200 at October 31, 2017. The Company has provided a valuation reserve against substantially all of the net operating loss benefit. For the years ended October 31, 2017 and 2016, respectively the Company had an Alternative Minimum Tax of $27,192 and $65,129 due.
For income tax reporting purposes, the Company’s aggregate UK and Norway unused net operating losses approximate $12,718 with no expiration. The deferred tax asset related to the UK and Norway tax carry-forwards is approximately $1,780. The Company has provided a valuation reserve against a portion of the net operating loss benefit, because in the opinion of management which is based upon the earning history of the Company, it is more likely than not that the benefits allowed will not be fully realized. Those remaining and not allowed are recorded by the Company and are expected to be used in the near future.
Components of deferred tax assets as of October 31, 2017 and 2016 are as follows:
The Company did not incur any regular income tax but did incur an Alternative Minimum Tax expense in the USA. For financial purposes in its U.S. entities and other foreign entities not included above we have been able to use net operating loss carry-forwards and other timing differences during the current and prior year to offset any tax liabilities in the various tax jurisdictions. The use of these income tax benefits in the current and prior year have been adjusted for and offset by a valuation allowance as noted above. The Company believes the future use and benefit of these tax assets is still uncertain and may not be realized.
The Company’s income tax returns are subject to audit by taxing authorities for the years beginning November 1, 2014.
A reconciliation between the amounts of income tax benefit determined by applying applicable U.S. statutory tax rate to pre-tax income is as follows:
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/presentationRef