Entity information:
Note
3
– Income Taxes
 
The components of the Company
’s current (benefit)/provision for income taxes are as follows:
 
   
201
7
    
201
6
  
Curren
t
                
Federa
l
   $
4,000
     $
8,000
  
State
    
1,500
      
1,500
  
Deferre
d
    
-
      
-
  
Total
  $
5,500
     $
9,500
  
 
 
The effective tax rate used to compute income tax expense and deferred tax assets and liabilities is a federal rate of
34%
and a state rate of
5.68%,
net of the federal tax effect.
 
A reconciliation of the expected income tax expense
to the recorded income tax expense is as follows for the years ended
November 30:
 
   
201
7
    
201
6
  
                 
Federal income tax provision computed at federal statutory rat
e
   $
157,327
     $
157,883
  
State income taxes, net of federal tax provisio
n
    
22,905
      
22,986
  
Other adjustment
s
    
8,504
      
14,906
  
Change in valuation allowance and expiration of certain net operating losses
    
(183,236
 )    
(186,275
 )
Income Tax Provision
   $
5,500
     $
9,500
  
 
 
The components of the Company
’s deferred tax assets and liabilities for federal and state income taxes consist of the following:
 
   
201
7
    
201
6
  
Deferred revenu
e
   $
7,071
     $
34,754
  
Deferred rent
    
7,813
      
15,867
  
Marketing Fund net contribution
s
    
270,089
      
233,266
  
Allowance for doubtful accounts and notes receivabl
e
    
7,569
      
9,862
  
Accrued expense
s
    
55,946
      
57,468
  
Net operating loss carryforward
s
    
1,009,553
      
1,186,361
  
Valuation allowanc
e
    
(457,394
 )    
(641,170
 )
Total Deferred Income Tax Asse
t
   $
900,647
     $
896,408
  
                 
Depreciation and amortizatio
n
   $
(652,647
 )   $
(648,408
 )
Total Deferred Income Tax Liabilitie
s
   $
(652,647
 )   $
(648,408
 )
                 
Total Net Deferred Tax Asse
t
   $
248,000
     $
248,000
  
 
On
December 22, 2017
the Tax Cuts and Jobs Act (the “Act”) was signed into law. Among other provisions, the Act reduces the Federal statutory corporate income tax rate from
35%
to
21%.
This rate reduction is
not
expected to have a significant impact on the net deferred tax asset which will be reviewed during the
first
quarter of fiscal
2018.
 
As of
November 30,
2017
the Company has net operating loss carryforwards expiring between
2018
and
2029
for U.S. federal income tax purposes of approximately
$2,592,000.
The Company routinely reviews the future realization of tax assets based on projected future reversals of taxable temporary differences, available tax planning strategies and projected future taxable income. A valuation allowance has been established for
$457,000
and
$641,000
as of
November 30, 2017
and
2016,
respectively, for the deferred tax benefit related to those loss carryforwards and other deferred tax assets, that are more likely than
not
that the deferred tax asset will
not
be realized.