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Note H - Income Taxes | 12 Months Ended
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Mar. 30, 2025
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE H – INCOME TAXES The income tax provision consists of the following for the fiscal years ended March 30, 2025 and March 31, 2024:
|  | March 30, |  |  | March 31, |
|  | 2025 |  |  | 2024 |
Federal |  |  |  |  |  |  |  |
Current |  | $ | 6,909 |  |  | $ | 5,767 |
Deferred |  |  | (190 | ) |  |  | 118 |
Total Federal income tax |  |  | 6,719 |  |  |  | 5,885 |
State and local |  |  |  |  |  |  |  |
Current |  |  | 2,060 |  |  |  | 1,903 |
Deferred |  |  | (44 | ) |  |  | 47 |
Total State and local income tax |  |  | 2,016 |  |  |  | 1,950 |
Total provision for income taxes |  | $ | 8,735 |  |  | $ | 7,835 |
The income tax provisions for the fiscal years ended March 30, 2025 and March 31, 2024 reflect effective tax rates of 26.7% and 28.5%, respectively. The total income tax provision for the fiscal years ended March 30, 2025 and March 31, 2024 differs from the amounts computed by applying the United States Federal income tax rate of 21% to income before income taxes as a result of the following:
|  | March 30, |  |  | March 31, |
|  | 2025 |  |  | 2024 |
Income tax provision at the U.S. Federal statutory rate |  | $ | 6,880 |  |  | $ | 5,765 |
State and local income taxes, net of U.S. Federal income tax benefit |  |  | 1,527 |  |  |  | 1,485 |
Change in uncertain tax positions, net |  |  | 116 |  |  |  | 73 |
Nondeductible meals and entertainment and other |  |  | (72 | ) |  |  | (24 | )
Nondeductible executive compensation |  |  | 284 |  |  |  | 536 |
Total provision for income taxes |  | $ | 8,735 |  |  | $ | 7,835 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:
|  | March 30, |  |  | March 31, |
|  | 2025 |  |  | 2024 |
Deferred tax assets |  |  |  |  |  |  |  |
Accrued expenses |  | $ | 312 |  |  | $ | 303 |
Allowance for credit losses |  |  | 159 |  |  |  | 101 |
Deferred revenue |  |  | 246 |  |  |  | 305 |
Deferred stock compensation |  |  | 106 |  |  |  | 28 |
Operating lease liability |  |  | 1,189 |  |  |  | 1,505 |
Other |  |  | 177 |  |  |  | 151 |
Total deferred tax assets |  | $ | 2,189 |  |  | $ | 2,393 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Deductible prepaid expense |  | $ | 125 |  |  | $ | 150 |
Operating lease right-of-use asset |  |  | 1,091 |  |  |  | 1,373 |
Depreciation expense |  |  | 360 |  |  |  | 465 |
Amortization |  |  | 103 |  |  |  | 130 |
Total deferred tax liabilities |  |  | 1,679 |  |  |  | 2,118 |
Net deferred tax asset |  | $ | 510 |  |  | $ | 275 |
A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. We consider the level of historical taxable income, scheduled reversal of temporary differences, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted. Based upon these considerations, management believes that it is more likely than not that the Company will realize the benefit of its deferred tax asset. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, for the fiscal years ended March 30, 2025 and March 31, 2024:
|  | March 30, 2025 |  |  | March 31, 2024 |
Unrecognized tax benefits, beginning of year |  | $ | 465 |  |  | $ | 432 |
Decreases of tax positions taken in prior years |  |  | (60 | ) |  |  | (19 | )
Increases based on tax positions taken in current year |  |  | 127 |  |  |  | 52 |
Unrecognized tax benefits, end of year |  | $ | 532 |  |  | $ | 465 |
The amount of unrecognized tax benefits included in Other liabilities at March 30, 2025 and March 31, 2024 were $532 and $465, respectively, all of which would impact Nathan’s effective tax rate, if recognized. As of March 30, 2025 and March 31, 2024, the Company had $395 and $345, respectively, accrued for the payment of interest and penalties. For the fiscal years ended March 30, 2025 and March 31, 2024, Nathan’s recognized interest and penalties in the amounts of $49 and $41, respectively. During the fiscal year ending March 29, 2026, we believe it is reasonably possible the amount of unrecognized tax benefits, excluding the related accrued interest and penalties, could be reduced by up to $55, due primarily to the lapse of statutes of limitations which would favorably impact Nathan’s effective tax rate, although no assurances can be given in this regard. On August 16, 2022 the United States enacted the Inflation Reduction Act. Among other provisions, this law imposes a 1% excise tax on stock buybacks made after December 31, 2022, with certain exceptions including stock repurchases of less than $1,000 within a tax year. We do not expect this law to have a material impact on our consolidated financial statements. The American Rescue Plan Act (“ARPA”), among other things, includes provisions to expand the IRC Section 162(m) disallowance for deduction of certain compensation paid by publicly held corporations. Effective tax years starting after December 31, 2026 (March 29, 2027 for the Company), ARPA expands the limitation to cover the next five most highly compensated employees. We continue to evaluate the potential impact ARPA may have on our operations and consolidated financial statements in future periods. The earliest tax years that are subject to examination by taxing authorities by major jurisdictions are as follows:
Jurisdiction |  | Fiscal Year
Federal |  | 2022
New York State |  | 2022
New York City |  | 2022
New Jersey |  | 2021
California |  | 2021

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