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INCOME TAXES
 12 Months Ended
Dec. 30, 2011
INCOME TAXES  
INCOME TAXES

12. INCOME TAXES

        The provision (benefit) for income taxes is comprised of:

 
   Fiscal Year  
 
   2011   2010   2009  

Current federal (benefit) taxes

   $ (22,000 ) $ (80,000 ) $ —  

Current state taxes

     58,000     32,000     10,000  

Deferred federal taxes (benefit)

     1,064,000     94,000     (1,564,000 )

Deferred state taxes (benefit)

     400,000     298,000     (377,000 )
               

 

   $ 1,500,000   $ 344,000   $ (1,931,000 )
               

        The provision (benefit) for income taxes reconciles to the amounts computed by applying the statutory federal tax rate of 34% to our income (loss) before income taxes. The sources and tax effects of the differences for fiscal years 2011, 2010 and 2009 are as follows:

 
   2011   2010   2009  

Computed "expected" federal income tax expense (benefit)

   $ 1,132,000   $ 1,042,000   $ (2,552,000 )

Permanent differences

     88,000     107,000     121,000  

Current and deferred state income tax expense (benefit), net of federal benefit

     302,000     217,000     (413,000 )

Change in valuation allowances on deferred tax assets

     —     (934,000 )   934,000  

Other

     (22,000 )   (88,000 )   (21,000 )
               

 

   $ 1,500,000   $ 344,000   $ (1,931,000 )
               

        The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets and liabilities are as follows:

 
   December 30,
2011 		  December 31,
2010 		  January 1,
2010 		 

Current deferred tax assets:

                    

Accrued litigation judgment

   $ —   $ 18,000   $ 54,000  

Accounts receivable allowance

     171,000     382,000     741,000  

Other accrued liabilities

     895,000     794,000     786,000  

Federal and state net operating losses

     —     1,937,000     —  
               

 

     1,066,000     3,131,000     1,581,000  

Valuation allowance

     —     —     (412,000 )
               

Net deferred tax assets

     1,066,000     3,131,000     1,169,000  
               

Current deferred tax liabilities:

                    

Deferred revenue

     (8,353,000 )   (4,491,000 )   (2,623,000 )

Other

     (62,000 )   (47,000 )   (25,000 )
               

 

     (8,415,000 )   (4,538,000 )   (2,648,000 )
               

Net current deferred tax liability

   $ (7,349,000 ) $ (1,407,000 ) $ (1,479,000 )
               

Deferred tax assets, net of current portion:

                    

Federal and state net operating losses

   $ 5,680,000   $ 455,000   $ 914,000  

Equipment and leasehold improvement depreciation

     —     42,000     191,000  

Intangible assets

     —     33,000     803,000  

Other

     72,000     121,000     93,000  
               

 

     5,752,000     651,000     2,001,000  

Valuation allowance

     —     —     (522,000 )
               

Net deferred tax assets

     5,752,000     651,000     1,479,000  

Deferred tax liabilities, net of current portion:

                    

Goodwill amortization

     (460,000 )   (29,000 )   (396,000 )

Fixed assets

     (83,000 )   —     —  

Other

     (109,000 )   —     —  
               

Net deferred tax assets, net of current portion

   $ 5,100,000   $ 622,000   $ 1,083,000  
               

        At December 30, 2011, the Company had federal and state operating loss carryovers of $13.5 million and $16.3 million, respectively. These carryovers expire through 2032 and 2033 for federal and state income taxes, respectively.

        Management also believes that there are no material uncertain tax positions that would impact the accompanying consolidated financial statements. The Company's policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense. The Company may be subject to examination by the Internal Revenue Service for calendar years 2008 through 2011. The Company may also be subject to examination on certain state and local jurisdictions for the years 2007 through 2011.