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Income Taxes: | 12 Months Ended
--- | ---
Dec. 29, 2018
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, 2018 |  | December 30, 2017 |  | December 31, 2016 |
Federal income tax expense at statutory rate (21%, 35%, 35%) |  | $ | 8,249,400 |  | $ | 12,758,000 |  | $ | 12,549,000 |
Change in valuation allowance |  |  | (13,800) |  |  | 7,500 |  |  | 13,800 |
State and local income taxes, net of federal benefit |  |  | 1,334,100 |  |  | 1,057,100 |  |  | 1,019,000 |
Permanent differences, including stock option expenses |  |  | (355,500) |  |  | (628,400) |  |  | 84,300 |
Adjustment to uncertain tax positions |  |  | 4,500 |  |  | 77,800 |  |  | 2,900 |
Rate change |  |  | — |  |  | (1,540,300) |  |  | — |
Other, net |  |  | (61,100) |  |  | 139,300 |  |  | 36,900 |
Actual income tax expense |  | $ | 9,157,600 |  | $ | 11,871,000 |  | $ | 13,705,900 |
Components of the provision for income taxes are as follows:
|  | Year Ended |
|  | December 29, 2018 |  | December 30, 2017 |  | December 31, 2016 |
Current: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 6,355,800 |  | $ | 10,296,100 |  | $ | 12,029,600 |
State |  |  | 1,551,000 |  |  | 1,688,100 |  |  | 1,605,700 |
Foreign |  |  | 423,000 |  |  | 365,900 |  |  | 396,600 |
Current provision |  |  | 8,329,800 |  |  | 12,350,100 |  |  | 14,031,900 |
Deferred: |  |  |  |  |  |  |  |  |  |
Federal |  |  | 967,300 |  |  | (463,800) |  |  | (306,700) |
State |  |  | (139,500) |  |  | (15,300) |  |  | (19,300) |
Deferred provision |  |  | 827,800 |  |  | (479,100) |  |  | (326,000) |
Total provision for income taxes |  | $ | 9,157,600 |  | $ | 11,871,000 |  | $ | 13,705,900 |
The tax effects of temporary differences that give rise to the net deferred income tax assets and liabilities are presented below:
|  | December 29, 2018 |  | December 30, 2017 |
Deferred tax assets: |  |  |  |  |  |  |
Accounts receivable and lease reserves |  | $ | 215,900 |  | $ | 179,800 |
Non-qualified stock option expense |  |  | 2,071,600 |  |  | 1,800,600 |
Deferred revenue |  |  | 2,020,100 |  |  | 2,197,800 |
Trademarks |  |  | 39,800 |  |  | 44,300 |
Lease deposits |  |  | 1,004,700 |  |  | 1,110,000 |
Loss from and impairment of equity and note investments |  |  | 2,620,700 |  |  | 2,634,500 |
Valuation allowance |  |  | (2,620,700) |  |  | (2,634,500) |
Other |  |  | 331,400 |  |  | 190,600 |
Total deferred tax assets |  |  | 5,683,500 |  |  | 5,523,100 |
Deferred tax liabilities: |  |  |  |  |  |  |
Lease revenue and initial direct costs |  |  | (6,664,800) |  |  | (5,707,000) |
Depreciation and amortization |  |  | (167,000) |  |  | (136,600) |
Total deferred tax liabilities |  |  | (6,831,800) |  |  | (5,843,600) |
Total net deferred tax liabilities |  | $ | (1,148,300) |  | $ | (320,500) |
On December 22, 2017, the Tax Cut and Jobs Act (the “Tax Act”) was signed into law. The Tax Act made changes to the U.S. tax code that affected our income tax rates in 2017 and 2018, notably the reduction of the U.S. federal corporate income tax rate from 35% to 21% beginning in 2018. Accounting guidance applicable to income taxes required us to recognize the impact of the change in tax rate on our existing deferred tax assets and liabilities as of the date that the Tax Act was signed into law. We recorded a reduction in our 2017 income tax expense of $1.5 million and a corresponding reduction in our net deferred income tax liabilities as a result of the decrease in the federal income tax rate. During the years ended December 29, 2018, December 30, 2017 and December 31, 2016, $0, $0 and $599,400, 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 $2.6 million and $2.6 million as of December 29, 2018 and December 30, 2017, respectively, have been recorded. The amount of unrecognized tax benefits, including interest and penalties, as of December 29, 2018 and December 30, 2017, was $589,000 and $583,100, respectively, primarily for potential 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 $37,700 and $32,000 for the payment of interest and penalties at December 29, 2018 and December 30, 2017, respectively. The following table summarizes the activity related to the Company’s unrecognized tax benefits:
|  | Total |
Balance at December 31, 2016 |  | $ | 479,500 |
Increases related to current year tax positions |  |  | 192,900 |
Subtractions for tax positions of prior years |  |  | (8,300) |
Expiration of the statute of limitations for the assessment of taxes |  |  | (113,000) |
Balance at December 30, 2017 |  |  | 551,100 |
Increases related to current year tax positions |  |  | 135,600 |
Expiration of the statute of limitations for the assessment of taxes |  |  | (135,400) |
Balance at December 29, 2018 |  | $ | 551,300 |
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 2014. 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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