Entity information:

Note 7. FEDERAL INCOME TAXES

 

Deferred taxes as of May 31, 2017 and 2016 are as follows:

 

    2017     2016  
Deferred tax asset:                
Net operating loss carryforward   $ 2,102,924     $ 2,288,919  
Stock compensation costs     -       25,346  
Accrued expenses     113,021       -  
Allowance for doubtful accounts     8,788       4,508  
Other     27,540       24,001  
Total deferred tax asset     2,252,273       2,342,774  
Deferred tax liability:                
Depreciation and amortization, tax reporting in excess of financial     (1,970,858 )     (1,059,092 )
Net deferred tax asset   $ 281,415     $ 1,283,682  

 

In assessing the reliability of deferred tax assets, management considers the likelihood of whether it is more likely than not the net deferred tax asset will be realized. Based on this evaluation, management has determined that Greystone will be able to realize the full effect of the deferred tax asset and no valuation allowance has been recorded as of May 31, 2017 and 2016, respectively.

 

The net change in deferred taxes for the year ended May 31, 2017 and 2016 is as follows:

 

    2017     2016  
Net operating loss carryforward   $ (229,465 )   $ 396,246  
Depreciation and amortization, tax reporting in excess of financial     (911,766 )     (906,087 )
Stock compensation costs     18,124       3,714  
Allowance for doubtful accounts     4,280       -  
Accrued expenses     113,021       -  
Other     3,539       10,572  
Net decrease   $ (1,002,267 )   $ (495,555 )

 

The provision for income taxes at May 31, 2017 and 2016 consists of the following:

 

    2017     2016  
Current income tax – Federal and State   $ 9,723     $ -  
Deferred income tax provision     1,002,267       495,555  
Provision for income taxes   $ 1,011,990     $ 495,555  

 

Greystone’s provision for income taxes for the years ended May 31, 2017 and 2016 differs from the federal statutory rate as follows:

 

    2017     2016  
Tax provision using statutory rates     34 %     34 %
Net operating loss expiration     -       6  
Other     (3 )     (1 )
Tax provision per financial statements     31 %     39 %

 

At May 31, 2017, Greystone had a net operating loss (NOL) for Federal income tax purposes from inception through May 31, 2005 of $15,339,800 expiring in fiscal year 2018 through fiscal year 2025 of which $1,800,000 is management’s estimate of the usable amount pursuant to Internal Revenue Code Section 382. The limitation is due to a change in control of Greystone during the fiscal year ended May 31, 2005. The utilization of NOL’s accumulated through fiscal year 2005 is limited to approximately $225,000 per year.

 

    NOL Carryforward     Year Expiring  
Cumulative through May 31, 2005   $ 1,800,000       2018 - 2025  
Year ended May 31, 2006     73,284       2026  
Year ended May 31, 2007     2,151,837       2027  
Year ended May 31, 2011     746,484       2031  
Year ended May 31, 2015     321,625       2035  
Year Ended May 31, 2016     1,060,747       2036