Quarterly report pursuant to Section 13 or 15(d)

Note 22 - Income Taxes

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Note 22 - Income Taxes
9 Months Ended
Aug. 31, 2021
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

22.

INCOME TAXES

 

For the three months ended August 31, 2021 and 2020, the Company recorded an income tax benefit of $0.1 million and $0, respectively. For the nine months ended August 31, 2021 and 2020, the Company recorded an income tax expense of $0.1 million and $0, respectively. For the three months ended August 31, 2021 and 2020, the effective tax rate was 4.5% and 0%, respectively. For the nine months ended August 31, 2021 and 2020, the effective tax rate was 37.5% and 0%, respectively. The Company’s tax rate differs from the statutory rate of 21.0% due to the effects of state taxes net of federal benefit, the foreign tax rate differential as a result of Byrna South Africa, effects of permanent non-deductible expenses, the recording of a valuation allowance against the deferred tax assets generated in the prior period, utilization of Net Operating Loss (“NOL”) and other effects.

 

The Company is subject to income tax in the U.S., as well as various state and international jurisdictions. The federal and state tax authorities can generally reduce a net operating loss (but not create taxable income) for a period outside the statute of limitations in order to determine the correct amount of net operating loss which may be allowed as a deduction against income for a period within the statute of limitations. Additional information regarding the statutes of limitations can be found in Note 23, “Income Taxes,” in the Notes to Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2020.

 

On March 27, 2020, Congress signed into law the $2 trillion bipartisan CARES Act. The CARES Act includes a variety of economic and tax relief measures intended to stimulate the economy, including loans for small businesses, payroll tax credits/deferrals, and corporate income tax relief. Due to the Company’s history of net operating losses and full valuation allowance, the CARES Act did not have a significant effect to the income tax provision, as the corporate income tax relief was directed towards cash taxpayers.