Income Taxes |
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| Income Taxes | Note 5—Income Taxes United States and foreign loss before provision for income taxes was as follows (in thousands):
The provision for income taxes consisted of the following (in thousands):
Income taxes differ from the amounts computed by applying the statutory federal income tax rate of 21% for fiscal years 2025 and 2024. The reconciliation of this difference is as follows (in thousands):
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 significant components of the deferred tax assets and liabilities are as follows (in thousands):
We evaluate whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. As of December 27, 2025 and December 28, 2024, a valuation allowance of $81.8 million and $77.1 million, respectively, has been provided based on our assessment that it is more likely than not that sufficient taxable income will not be generated to realize the tax benefits of the temporary differences. The valuation allowance increased by $4.6 million and $11.3 million during fiscal years 2025 and 2024, respectively. These increases in these years primarily relate to the increases in the net operating loss (“NOL”) carryforward and tax credit carryforwards. As of December 27, 2025 we had $300.3 million of federal NOL carryforwards, of which $104.2 million will expire from 2028 through 2037, and $196.1 million of which will be carried forward indefinitely, and $106.6 million of state NOL carryforwards that will expire from 2029 through 2045. We had federal and state tax credit carryforwards of $2.8 million and $2.5 million, respectively, at December 27, 2025. Federal tax credit carryforwards began to expire in 2025 and state tax credits carryforward indefinitely. In addition, we had $2.1 million of NOL in the PRC that expired in 2025, with a remaining amount of $0.5 million of NOL carryforward in the PRC at December 27, 2025. Utilization of the NOL and tax credit carryforwards is subject to an annual limitation due to the ownership percentage change limitations provided by Section 382 of the Internal Revenue Code (the “Code”) and similar state and foreign law provisions. Under Section 382 of the Code, substantial changes in our ownership may limit the amount of NOL and tax credit carryforwards that are available to offset taxable income. The annual limitation would not automatically result in the loss of NOL and tax credit carryforwards but may limit the amount available in any given future period. Additional limitations on the use of these tax attributes could occur in the event of possible disputes arising in examination from various taxing authorities. We file income tax returns with federal, state and foreign jurisdictions. We are no longer subject to Internal Revenue Service (“IRS”) or state examinations for periods prior to 2022, although certain carryforward attributes that were generated prior to 2022 may still be adjusted by the IRS. We include interest and penalties related to uncertain tax positions within the provision for income taxes. As of December 27, 2025 and December 28, 2024, the interest or penalties accrued related to unrecognized tax benefits were insignificant, and during fiscal years 2025 and 2024, the interest and penalties related to uncertain tax position recorded were insignificant. As of December 27, 2025, we had no unrecognized tax benefits that would significantly change in the next 12 months. |
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