Note 14 - Income Taxes

12 Months Ended

Dec. 31, 2015

14. Income Taxes

A summary of the income tax benefit is as follows:

	Year Ended
	December 31,			December 28,		December 29,
	2015			2014		2013
	(In thousands)
Current:
Federal	$	247		$	—	$	—
State		—			—		—
		247			—		—
Deferred:
Federal	$	(8,939	)	$	—	$	—
State		(1,277	)		—		—
		(10,216	)		—		—
Income tax benefit	$	(9,969	)	$	—	$	—

Reconciliation of the statutory federal income tax rate to the Company’s actual rate based on income (loss) before income tax benefit is summarized as follows:

	Year Ended
	December 31,			December 28,			December 29,
	2015			2014			2013

Statutory federal tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal income taxes		6.9			—			—
Change in valuation allowance		(131.1	)		(34.9	)		(35.3	)
Permanent tax differences – Merger expenses		11.4			(0.1	)		0.3
Permanent tax differences – Investment in unconsolidated investee		9.8			—			—
Permanent tax differences – Other		1.4			—			—
Other, net		(1.8	)		—			—
		(68.4	) %		—	%		—	%

The Company’s current and non-current deferred tax assets and (liabilities) are as follows:

	December 31,			December 28,
	2015			2014
	(In thousands)
Current:
Accruals and reserves	$	1,326		$	674
Transaction costs		81			193
Prepaid services		(897	)		—
Net operating loss carryforwards		9,917			—
Valuation allowances		(10,427	)		(867	)
	$	—		$	—
Non-current:
Development costs	$	2,885		$	3,173
Share-based compensation expense		1,550			1,269
Amortization of intangible assets		(19,834	)		48
Alternative minimum tax credit carryforward		1,420			919
Net operating loss carryforwards		21,696			40,684
Investment in unconsolidated investee		—			(1,530	)
Other		2,978			(730	)
Valuation allowances		(15,166	)		(43,833	)
	$	(4,471	)	$	—

Deferred tax assets are evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies. Management has evaluated all available evidence and has determined that negative evidence continues to outweigh positive evidence for the realization of deferred tax assets and as a result continues to provide a full valuation allowance against its deferred tax assets as of December 31, 2015.

As of December 31, 2015, the Company had approximately $74.8 million of federal net operating loss carryforwards, which will begin to expire in 2032, and approximately $99.3 million of state net operating loss carryforwards, which will expire at various times depending on specific state laws.

The Company is currently under IRS audit for the 2009 through 2013 tax years and the IRS has proposed certain adjustments to the tax filings for those years. However, the Company believes it is more likely than not that it will prevail in challenging the proposed adjustments and maintains that the positions taken were proper and supported by applicable laws and regulations. The Company does not believe, when resolved, that this dispute will have a material effect on its consolidated financial statements. However, an unexpected adverse resolution could have a material effect on the consolidated financial statements in a particular quarter or fiscal year.

During the second quarter of 2015, the Company was notified by the state of California that its audit of the Company for the 2010 tax year had been completed and resulted in no adjustments.