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INCOME TAXES
 12 Months Ended
Jul. 31, 2024
INCOME TAXES  
INCOME TAXES

10. INCOME TAXES

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company recorded the valuation allowance due to the uncertainty of future realization of federal and state net operating loss carryforwards. The deferred income tax assets are comprised of the following at July 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

Deferred income tax assets:

 

$8,239,456

 

 

$8,069,028

 

Valuation allowance

 

 

(8,239,456)

 

 

(8,069,028)

Net deferred tax asset

 

$-

 

 

$-

 

 

Reconciliation between the statutory rate and the effective tax rate is as follows at July 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

Effective Tax Rate Reconciliation:

 

 

 

 

 

 

Federal statutory tax rate

 

 

21.0%

 

 

21.0%

State taxes, net of federal benefit

 

 

0.0%

 

 

0.0%

Change in valuation allowance

 

 

(21.0)%

 

 

(21.0)%

Effective tax rate

 

 

0.0%

 

 

0.0%

 

As of July 31, 2024, the Company had net operating loss carryforwards of approximately $39,235,507 and net operating loss carryforwards expire in 2023 through 2031. The current year’s net operating loss will carryforward indefinitely, limited to 80% of the current year taxable income.

 

The current income tax benefit of $8,239,456 generated for the year ended July 31, 2024, was offset by an equal increase in the valuation allowance. The valuation allowance was increased due to uncertainties as to the Company’s ability to generate sufficient taxable income to utilize the net operating loss carryforwards which is the only significant component of deferred taxes.

 

The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expense. As of July 31, 2024 and 2023 the Company has no unrecognized uncertain tax positions, including interest and penalties.