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Income Taxes: | 12 Months Ended
--- | ---
Dec. 29, 2012
Income Taxes: |
Income Taxes: | 10. Income Taxes: A reconciliation of the expected federal income tax expense based on the federal statutory tax rate to the actual income tax expense is provided below:
|  | Year Ended |
|  | December 29, 2012 |  | December 31, 2011 |
Federal income tax expense at statutory rate (35%) |  | $ | 8,104,400 |  | $ | 8,183,600 |
Valuation allowance |  | 1,413,600 |  | 577,700 |
State and local income taxes, net of federal benefit |  | 677,700 |  | 827,700 |
Permanent differences, including stock option expenses |  | 60,200 |  | (223,600 | )
Other, net |  | (38,300 | ) | (78,800 | )
Actual income tax expense |  | $ | 10,217,600 |  | $ | 9,286,600 |
Components of the provision for income taxes are as follows:
|  | Year Ended |
|  | December 29, 2012 |  | December 31, 2011 |
Current: |  |  |  |  |
Federal |  | $ | 8,332,400 |  | $ | 4,718,000 |
State |  | 1,186,000 |  | 860,000 |
Foreign |  | 374,900 |  | 377,000 |
Current provision |  | 9,893,300 |  | 5,955,000 |
Deferred: |  |  |  |  |
Federal |  | 435,300 |  | 2,890,500 |
State |  | (111,000 | ) | 441,100 |
Deferred provision |  | 324,300 |  | 3,331,600 |
Total provision for income taxes |  | $ | 10,217,600 |  | $ | 9,286,600 |
The tax effects of temporary differences that give rise to the net deferred income tax assets and liabilities are presented below:
|  | December 29, 2012 |  | December 31, 2011 |
Deferred tax assets: |  |  |  |  |
Accounts receivable and lease reserves |  | $ | 368,600 |  | $ | 315,600 |
Accrued restructuring charge |  | 64,500 |  | 65,500 |
Non-qualified stock option expense |  | 901,800 |  | 1,026,000 |
Deferred franchise and software license fees |  | 519,800 |  | 464,700 |
Trademarks |  | 96,400 |  | 98,300 |
Lease deposits |  | 1,093,200 |  | 943,800 |
Loss from and impairment of equity and note investments |  | 4,074,300 |  | 2,660,700 |
Valuation allowance |  | (4,074,300 | ) | (2,660,700 | )
Other |  | 301,800 |  | 305,900 |
Total deferred tax assets |  | 3,346,100 |  | 3,219,800 |
Deferred tax liabilities: |  |  |  |  |
Lease revenue and initial direct costs |  | (9,267,900 | ) | (8,776,600 | )
Depreciation and amortization |  | (222,400 | ) | (263,100 | )
Total deferred tax liabilities |  | (9,490,300 | ) | (9,039,700 | )
Total net deferred tax liabilities |  | $ | (6,144,200 | ) | $ | (5,819,900 | )
During the years ended December 29, 2012 and December 31, 2011, $884,300 and $249,500 respectively, was directly credited to stockholders’ equity to account for excess tax benefits related to stock option exercises. The Company has assessed its taxable earnings history and prospective future taxable income. Based upon this assessment, the Company has determined that it is more likely than not that its deferred tax assets will be realized in future periods and no valuation allowance is necessary, except for the deferred tax assets related to the loss from and impairment of equity and note investments (which are capital losses for tax purposes). As a result, valuation allowances of $4.1 million and $2.7 million as of December 29, 2012 and December 31, 2011, respectively, have been recorded. The amount of unrecognized tax benefits, including interest and penalties, as of December 29, 2012 and December 31, 2011, was $323,400 and $334,800, respectively, primarily for potential foreign and state taxes. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense for all periods presented. The Company had accrued approximately $11,100 and $25,300 for the payment of interest and penalties at December 29, 2012 and December 31, 2011, respectively. The following table summarizes the activity related to the Company’s unrecognized tax benefits:
|  | Total |
Balance at December 25, 2010 |  | $ | 155,900 |
Increases related to current year tax positions |  | 88,600 |
Additions for tax positions of prior years |  | 103,700 |
Expiration of the statute of limitations for the assessment of taxes |  | (38,700 | )
Balance at December 31, 2011 |  | 309,500 |
Increases related to current year tax positions |  | 95,900 |
Subtractions for tax positions of prior years |  | (2,800 | )
Expiration of the statute of limitations for the assessment of taxes |  | (90,300 | )
Balance at December 29, 2012 |  | $ | 312,300 |
The Company and its subsidiaries file income tax returns in the U.S. federal, numerous state and certain foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2008. The Internal Revenue Service concluded its examination of our U.S. federal tax returns for the fiscal years ended 2008 and 2010 in 2010 and 2012, respectively. We expect various statutes of limitation to expire during the next 12 months. Due to the uncertain response of taxing authorities, a range of outcomes cannot be reasonably estimated at this time.

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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