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Note 4 - Income Taxes
 12 Months Ended
Mar. 30, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 4 – INCOME TAXES

 

Transcat’s income before income taxes on the Consolidated Statements of Income is as follows (amounts in thousands):

 

  

FY 2024

  

FY 2023

  

FY 2022

 

United States

 $15,064  $9,879  $10,417 

Foreign

  3,375   3,608   2,773 

Total

 $18,439  $13,487  $13,190 

 

The provision for income taxes for fiscal years 2024, 2023 and 2022 is as follows:

 

  

FY 2024

  

FY 2023

  

FY 2022

 

Current Tax Provision:

            

Federal

 $4,099  $1,938  $414 

State

  1,067   652   240 

Foreign

  1,185   395   752 
  $6,351  $2,985  $1,406 

Deferred Tax (Benefit) Provision:

            

Federal

 $(809) $(334) $456 

State

  (316)  (258)  (10)

Foreign

  (434)  406   (42)
  $(1,559) $(186) $404 

Provision for Income Taxes

 $4,792  $2,799  $1,810 

 

A reconciliation of the income tax provision computed by applying the statutory U.S. federal income tax rate and the income tax provision reflected in the Consolidated Statements of Income is as follows (amounts in thousands):

 

  

FY 2024

  

(ETR)

  

FY 2023

  

FY 2022

 

Federal Income Tax at Statutory Rate

 $3,872   21.0% $2,832  $2,770 

State Income Taxes, net of federal benefit

  593   3.2%  311   172 

Federal, State and Foreign Tax Credits

  (87)  -0.5%  (99)  (182)

Foreign Rate Differential

  41   0.2%  43   55 

Tax Impact of Equity Awards

  (634)  -3.4%  (416)  (1,395)

162(m) Limitation

  805   4.4%  -   - 

Non-Deductible Acquisition Costs

  71   0.4%  6   206 

GILTI and 78 Gross Up

  112   0.6%  83   161 

Other, net

  19   0.1%  39   23 

Total

 $4,792   26.0% $2,799  $1,810 

 

  

March 30,

  

March 25,

 
  

2024

  

2023

 

Deferred Tax Assets:

        

Accrued Liabilities

 $399  $362 

Lease Liabilities

  3,623   1,916 

Performance-Based Stock Award Grants

  1,094   720 

Inventory Reserves

  68   70 

Non-Qualified Deferred Compensation Plan

  12   62 

Post-Retirement Health Care Plans

  303   323 

Stock-Based Compensation

  897   570 

Capitalized Inventory Costs

  185   214 

Other

  270   314 

Total Deferred Tax Assets

 $6,851  $4,551 
         

Deferred Tax Liabilities:

        

Goodwill and Intangible Assets

 $(5,945) $(3,504)

Right of Use Assets

  (3,636)  (1,957)

Depreciation

  (6,498)  (5,462)

Other

  (63)  (166)

Total Deferred Tax Liabilities

 $(16,142) $(11,089)
         

Net Deferred Tax Liabilities

 $(9,291) $(6,538)

 

The Company files income tax returns with the U.S. government and various states as well as foreign governments. Open fiscal years subject to U.S. Government federal examination are 2021 through 2023. Open fiscal years subject to state examination are 2019 through 2023. The Company also files in Canada and Ireland.  Open fiscal years subject to examination for Canada are 2020 through 2023; open fiscal years subject to examination for Ireland are 2020 to 2023. There are no income tax years currently under examination by the Internal Revenue Service, states, Canadian and Irish tax authorities. The Company's foreign subsidiary undistributed earnings are considered to be permanently reinvested.

 

The Company’s policy regarding interest and/or penalties related to income tax matters is to recognize such items as a component of the income tax provision. The Company recognized no interest expense or penalties associated with uncertain tax benefits accrued for fiscal years 2024, 2023 and 2022. In accordance with applicable accounting guidance, the amount of unrecognized tax liability from uncertain positions was $0 at year-end fiscal year 2024, 2023 and 2022.

 

The Company assesses its deferred tax assets annually for expected utilization. If deemed necessary, valuation allowances are established to reduce the deferred tax assets to their net realizable value to the extent it is more likely than not that some portion or all of the deferred tax assets will not be realized based on the character of the carryforward item, the associated taxing jurisdiction, the relevant history for the particular item, the applicable expiration dates, and identified actions under the control of the Company in realizing such assets. The Company assesses the available positive and negative evidence surrounding the recoverability of the deferred tax assets and applies its judgment in estimating the amount of valuation allowance necessary. The Company has determined that a valuation allowance of $0 is appropriate for fiscal years 2024, 2023 and 2022.