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INCOME TAXES

12 Months Ended

Dec. 30, 2022

INCOME TAXES

INCOME TAXES

11. INCOME TAXES

The provision for income taxes is comprised of ⁽¹⁾:

​

​	​	​	​	​	​	​	​	​	​	​
​	​	Fiscal Year
​		2022			2021			2020
​	​	(in thousands)								​
Current federal taxes	​	$	(1,224)	​	$	(1,606)	​	$	(592)	​
Current state taxes	​		(73)	​		530	​		166	​
Current foreign taxes	​	​	—	​	​	—	​	​	18	​
Deferred federal taxes	​		(1,519)	​		(2,656)	​		(2,939)	​
Deferred state taxes	​		(188)	​		(255)	​		(1,826)	​
​	​	$	(3,004)	​	$	(3,987)	​	$	(5,173)	​

(1) Revenue from the Company’s foreign operations was immaterial for fiscal years 2022, 2021, and 2020.

The provision for income taxes reconciles to the amounts computed by applying the statutory federal tax rate of 21% for fiscal years 2022, 2021 and 2020 to the Company’s income before income taxes. The sources and tax effects of the differences for fiscal years 2022, 2021 and 2020 are as follows:

​

​	​	​	​	​	​	​	​	​	​	​
​		2022			2021			2020
​	​	(in thousands)								​
Computed “expected” federal income tax expense	​	$	(2,405)	​	$	(2,605)	​	$	(4,130)	​
Permanent differences	​		24	​		18	​		122	​
Nondeductible executive compensation	​	​	711	​	​	1,349	​	​	1,386	​
Stock options and disqualifying dispositions	​	​	576	​	​	(1,276)	​	​	4	​
Energy efficient building deduction	​	​	(1,378)	​	​	(558)	​	​	(738)	​
Current and deferred state income tax expense, net of federal benefit	​		(111)	​		(660)	​		(1,205)	​
Adjustment for uncertain tax positions	​	​	—	​	​	—	​	​	(142)	​
Research and development tax credit	​	​	(517)	​	​	(761)	​	​	(527)	​
Federal rate differential on NOL carryback	​	​	—	​	​	(579)	​	​	—	​
Change in valuation allowance	​	​	—	​	​	1,105	​	​	—	​
Other	​		96	​		(20)	​		57	​
​	​	$	(3,004)	​	$	(3,987)	​	$	(5,173)	​
​	​	​	​	​	​	​	​	​	​	​

​

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,		​	December 31,
​		2022			2021
​	​	(in thousands)
Deferred tax assets:	​	​	​	​	​	​
Other accrued liabilities	​	$	1,374	​	$	1,638
Federal and state net operating losses	​	​	23,089	​	​	22,645
Lease liability	​	​	3,592	​	​	4,523
Stock compensation	​	​	1,404	​	​	3,291
Capitalized research and development	​	​	2,078	​	​	—
Credit carryforwards	​	​	1,754	​	​	1,345
Excess business interest limitation	​	​	1,437	​	​	646
Other	​		207	​		345
Total deferred tax assets	​		34,935	​		34,433
Valuation allowance	​		(1,191)	​		(1,191)
Net deferred tax assets	​	$	33,744	​	$	33,242
Deferred tax liabilities:	​	​	​	​	​	​
Deferred revenue	​	$	(4,223)	​	$	(3,526)
Fixed assets	​	​	(2,778)	​	​	(2,875)
Intangible assets	​	​	(4,794)	​	​	(5,790)
Lease right-of-use assets	​	​	(3,406)	​	​	(4,202)
Total deferred tax liabilities	​		(15,201)	​		(16,393)
Net deferred tax asset	​	$	18,543	​	$	16,849
​	​	​	​	​	​	​

​

As of December 30, 2022, the Company had federal and state operating loss carryovers of $82.8 million and $91.6 million, respectively, and federal and state tax credit carryforwards of $1.6 million and $0.3 million, respectively. Out of the federal operating loss, $13.2 million will carryforward indefinitely. The remaining carryovers will begin to expire in 2023 through 2042.

During each fiscal year, management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize existing deferred tax assets. During fiscal year 2022, no changes were made to tax valuation allowance as the available positive and negative evidence did not warrant a revision. During fiscal year 2021, the Company determined that it was more-likely-than-not that a portion of the New Jersey net operating losses would not be utilized prior to expiration and, accordingly, recorded a valuation allowance of $1.1 million. Significant pieces of objective evidence evaluated included the Company’s proportional increase of revenue to other states resulting in a dilution of New Jersey sourced income as well as the Company’s forecasted amount of net operating loss utilization in New Jersey for certain members of the combined group.

As of December 30, 2022, the Company’s liabilities related to uncertain tax positions were immaterial to the consolidated financial statements. As of December 31, 2021, the Company did not have any liabilities related to uncertain tax positions. The Company may be subject to examination by the Internal Revenue Service (“IRS”) for calendar years 2019 through 2022. The Company may also be subject to examination on certain state and local jurisdictions for the years 2018 through 2022.

The Company's policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense. As of December 30, 2022 and December 31, 2021, the Company did not have any unrecognized tax benefits. In addition, during the fiscal year 2022, the Company did not have any additions or reductions of unrecognized tax benefits.

On June 10, 2021, the Company received notice from the State of New York indicating that the Company’s 2017, 2018, and 2019 state tax returns were under examination. The examination was finalized during the Company’s first quarter of fiscal year 2022 and there were no changes made by the State of New York to the state tax returns filed.

​

​

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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/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Section S99
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