Note 14 - Income Taxes
|12 Months Ended|
Dec. 25, 2022
|Notes to Financial Statements|
|Income Tax Disclosure [Text Block]||
(14) Income Taxes
Total income tax expense (benefit) for fiscal years 2022, 2021, and 2020 was (in thousands):
Income tax expense (benefit) from continuing operations consists of the following (in thousands):
Income tax expense (benefit) differs from amounts computed by applying the federal statutory income tax rate to income from continuing operations before income taxes as follows (in thousands):
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted. Intended to provide economic relief to those impacted by the COVID-19 pandemic, the CARES Act include provisions, among others, addressing the carryback of net operating losses (NOL)s, temporary modifications to the interest expense deduction limits, and technical amendments for qualified improvement property (QIP). Additionally, the CARES Act provides for refundable employee retention payroll tax credits, and the deferral of the employer-paid portion of social security taxes.
The Company took advantage of the CARES Act’s liquidity-enhancing provisions in the following manner:
The Employment-related tax credits line in the effective tax rate schedule above is comprised mainly of federal FICA tip credits which the Company utilizes to reduce its periodic federal income tax expense. A restaurant company employer may claim a credit against the company’s federal income taxes for FICA taxes paid on certain tip wages (the FICA tip credit). The credit against income tax liability is for the full amount of eligible FICA taxes. Employers cannot deduct from taxable income the amount of FICA taxes taken into account in determining the credit.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below (in thousands):
As of December 25, 2022, the Company has state net operating loss carry-forwards of $64.4 million and state tax credit carry-forwards of $428 thousand, which are available to offset state taxable income. The first of these carry forwards expires in with the last of such benefit expiring in 2041.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making this assessment. Based on this evaluation, management has recorded a valuation allowance against the Company’s gross deferred tax assets of $4.0 million and $4.8 million as of December 25, 2022 and December 26, 2021, respectively, related to certain state net operating loss carry-forwards and tax credit carry-forwards. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of the net deferred tax assets.
As of December 25, 2022, the Company’s gross unrecognized tax benefits totaled approximately $308 thousand, of which $244 thousand, if recognized, would impact the effective tax rate. The Company does not anticipate there will be any material changes in the unrecognized tax benefits within the next 12 months. Our continuing practice is to recognize interest and penalties related to uncertain tax positions in income tax expense.
A reconciliation of the beginning and ending amount of unrecognized tax benefits follows (amounts in thousands):
The Company files consolidated and separate income tax returns in the United States Federal jurisdiction and many state jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal or state and local income tax examinations for fiscal years before 2018.
No definition available.
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