|12 Months Ended|
Jan. 31, 2023
|Income Tax Disclosure [Line Items]|
The components of the provision for income taxes are comprised of the following for the fiscal years ended January 31:
For the years ended January 31, 2023 and 2022, the foreign income (loss) before provision for income tax was $51 and $1,774, respectively. For the years ended January 31, 2023 and 2022, the domestic loss before provision for income tax was ($110,609) and ($243,956), respectively.
Indefinite reinvestment is determined by management’s judgment about and intentions concerning the future operations of the Company. As part of its business strategies, the Company has determined that all earnings from foreign continuing operations will be deemed indefinitely reinvested outside of the United States. The Company's plans to indefinitely reinvest certain earnings are supported by projected working capital and long-term capital requirements in each foreign subsidiary location in which the earnings are generated.
A reconciliation of income tax expense at the U.S. federal statutory income tax rate to annual income tax expense at the Company’s effective tax rate is as follows:
Income tax expense was $58 and $465 for the fiscal years ended January 31, 2023 and 2022, respectively. The effective tax rate for the fiscal years ended January 31, 2023 and 2022 was (0.06)% and (0.1)%, respectively.
Deferred Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and carryforwards.
Significant components of the Company’s deferred tax assets and (liabilities) are as follows:
Income Tax Valuation Allowance
The following summarizes changes to valuation and qualifying accounts for fiscal year 2023 and fiscal year 2022:
As of January 31, 2023 and January 31, 2022, the Company had net operating loss carryforwards (NOLs) available to offset federal taxable income of approximately $413,570 and $324,787, respectively. $25,270 of the federal NOLs expire on various dates through 2037 and $388,300 are able to be carried forward indefinitely to offset 80% of future taxable income. The company has tax effected state NOL carryforwards of approximately $31,616 as of January 31, 2023 and $13,749 as of January 31, 2022 that expire on various dates through 2037.
In accordance with IRC Section 382, the extent to which net operating loss carryforwards can be used to offset future taxable income may be limited, depending on the extent of any ownership changes as defined by federal and various state and local jurisdictions. These limitations may result in the expiration of net operating loss carry forwards before utilization.
In assessing the realizability of the Company's net deferred tax assets, management considers whether it is more likely than not that some portion or all of the net deferred tax assets will be recognized. The ultimate realization of the net deferred tax assets is dependent upon the generation of taxable income during the periods in which temporary differences become deductible. Management considers taxes paid, if any, scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies that can be implemented by the Company in making this assessment. Based upon the level of historical taxable income, scheduled reversal of deferred tax liabilities, and projections for taxable income over the periods in which the temporary differences become deductible based on available tax planning strategies, management presently believes it is more likely than not that the Company may not realize all of the benefits of these deductible differences and, accordingly, has established a valuation allowance against the net deferred tax assets at January 31, 2023 and 2022.
The Company recognizes a tax position taken or expected to be taken (and any associated interest and penalties) if it is more likely than not that it will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company measures the tax position at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.
Management evaluated all income tax positions and determined that there were no uncertain tax positions that required reserves as of January 31, 2023 and 2022. The Company files tax returns in the United States federal jurisdiction and in many state jurisdictions. The tax years 2018 through 2023 remain open to examination by the major taxing jurisdictions to which the company is subject. No examinations are currently open.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 pandemic. Changes in tax laws or rates are accounted for in the period of enactment. The income tax provisions of the CARES Act did not have a significant impact on the Company's current taxes, deferred taxes, or uncertain tax positions.
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/disclosureRef