Note 10 - Income Taxes |
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Income Tax Disclosure [Text Block] |
(10) Income Taxes
The components of the provision for income taxes are as follows:
The reconciliation between income taxes computed at the federal statutory rate and the provision for income taxes is as follows:
The components of deferred tax assets and liabilities are as follows:
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law. The CARES Act includes several changes impacting business, including, but not limited to, enhanced business interest deductibility, net operating loss ("NOL") carryback provisions, payroll tax deferral provisions and employee retention tax credits. We recorded a $223,000 tax benefit in 2020 resulting from the NOL carryback provisions of the CARES Act.
As of October 1, 2022 and October 2, 2021, we recorded deferred tax liabilities (net of valuation allowances) of $7.1 million and $6.3 million, respectively, in other liabilities on our consolidated balance sheet. We have $5.6 million of state NOLs that begin to expire in 2031, but principally expire between 2031 and 2037.
The realization of our deferred tax assets is entirely dependent upon our ability to generate future taxable income in applicable jurisdictions. GAAP requires that we periodically assess the need to establish a reserve against our deferred tax assets to the extent we no longer believe it is more likely than not that they will be fully realized. As of October 1, 2022, we recorded a valuation allowance of $32,000 pertaining to various state NOLs that were not expected to be utilized. The valuation allowance is subject to periodic review and adjustment based on changes in facts and circumstances and would be reduced should we utilize the state NOLs and tax credits against which an allowance had previously been provided or determine that such utilization was more likely than not. The $ decrease in the valuation allowance during 2022 is primarily due to the utilization of state NOLs for which an allowance had been recorded together with a reduction in state apportionment rates.
As of October 1, 2022, we had no material, known tax exposures that required the establishment of contingency reserves for uncertain tax positions.
We classify interest and penalties related to unrecognized tax benefits as part of income tax expense. There were interest and penalties related to unrecognized tax benefits incurred during 2022, 2021 and 2020.
We file U.S. federal income tax returns as well as state and local income tax returns in various jurisdictions. Federal and various state tax returns filed subsequent to 2017 remain subject to examination. |