Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

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Income Taxes
 9 Months Ended
Feb. 29, 2024
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

Note 21: Income Taxes

 

The following table summarizes the Company’s income tax accrued for the three and six and months ended February 29, 2024 and February 28, 2023:

 

The Company accounts for income taxes under FASB ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.

 

The components of the income tax provision include:

 

   

Three Months Ended February 29,

  
   

2024

    

2023

  

Revenue

   $ 4,926,457     $ 5,437,302  

Directly attributable costs

     (2,799,498 )     (2,798,959 )

Deferred

     2,126,959       2,458,343  

Tax rate

     21 %     21 %

Tax expense

   $ 446,662     $ 516,252  

 

   

Nine months Ended February 29,

 
   

2024

    

2023

  

Revenue

   $ 15,238,198     $ 17,556,406  

Directly attributable costs

     (8,665,694 )     (10,165,796 )

Deferred

     6,572,504       7,390,610  

Tax rate

     21 %     21 %

Tax expense

   $ 1,380,226     $ 1,552,028  

 

Note: Change in uncertain tax position with all tax expense recorded in current year due to change in estimate. No prior year net operating loss was considered.

 

Due to the accrual of taxes related to Section 280E of the Internal Revenue Code, as amended, the Company has an uncertain tax accrual that is currently being expensed as a change in estimate. The Company has net operating losses that it believes are available to it to offset this expense; however, there can be no assurance under current interpretations of tax laws for cannabis companies that the Company will be allowed to use these net operating losses to offset Section 280E tax expenses.