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Note 6 - Income Taxes | 9 Months Ended
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Feb. 25, 2018
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
6 . | Income Taxes
The company ’s effective tax rate for the nine months ended February 25, 2018 and February 26, 2017 was a benefit of 154% and expense of 36%, respectively. The income tax benefit was $11.5 million for the nine months ended February 25, 2018, and income tax expense was $4.1 million for the nine months ended February 26, 2017. The income tax benefit and discrete benefit for the nine months ended February 25, 2018 is primarily due to a $13.9 million discrete benefit that mainly reflects the impact of the re-measurement of net deferred tax liabilities resulting from the permanent reduction in the U.S. statutory corporate tax rate from 35% to 21% . The income tax provision for the nine months ended February 26, 2017 was primarily due to state income taxes and incentive stock option expense; partially offset by the domestic manufacturing deduction and research and development credits. On December 22, 2017, the U.S. Government enacted the reconciled tax reform bill, commonly known as the Tax Cuts and Jobs Act of 2017 (the “TCJA”), which became effective on January 1, 2018. Among other tax related changes, the Company’s federal statutory tax rate has been reduced from 35 %, to an average rate of 29% for the fiscal year ended May 27, 2018, and then 21% for fiscal years thereafter. The TCJA also enhances and extends through 2026 the option to claim accelerated depreciation deductions on qualified property; however, the domestic manufacturing deduction, from which the Company has historically benefitted, has been eliminated. U nder GAAP, the Company is required to recognize the effects of changes in tax laws and tax rates on deferred tax assets and liabilities in the period in which the new legislation is enacted. At February 25, 2018, the Company had not completed its accounting for the tax effects of enactment of the TCJA; however, the Company made a reasonable estimate of the effects on its existing deferred tax balances and the one -time transition tax. The changes included in the TCJA are broad and complex and the Company does not have all the necessary information to analyze all income tax effects of the TCJA. The above income tax benefit amount is a provisional amount based on a reasonable estimate of the impact of the reduction in the corporate tax rate on our current and deferred tax liabilities. Changes in the estimate of the Company’s deferred tax asset and liability activity during fiscal year 2018 could impact the Company’s remeasurement of net deferred tax liabilities. The Company will continue to evaluate the TCJA and adjust the provisional amounts as additional information becomes available. The ultimate impact of the TCJA may differ from the provisional amounts due to changes in the Company’s interpretations and assumptions, as well as additional guidance on the interpretation of the TCJA . The Company will continue to assess its provision for income taxes as future guidance is issued. Although not anticipated, revisions to the Company’s provision for income taxes will be treated in accordance with the measurement period guidance outlined in Staff Accounting Bulletin No. 118. As of February 25, 2018 and May 28, 2017, the Company had unrecognized tax benefits of approximately $472 ,000 and $537 ,000, respectively. Included in the balance of unrecognized tax benefits as of February 25, 2018 and May 28, 2017 is approximately $366 ,000 and $419,000, respectively, of tax benefits that, if recognized, would result in an adjustment to the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly within the next twelve months. The Company has elect ed to classify interest and penalties related to uncertain tax positions as a component of its provision for income taxes. The Company has accrued an insignificant amount of interest and penalties relating to the income tax on the unrecognized tax benefits as of February 25, 2018 and May 28, 2017 . Due to tax attribute carryforwards, the Company is subject to examination for tax years 2015 forward for U.S. tax purposes. The Company is also subject to examination in various state jurisdictions for tax years 2012 forward, none of which were individually material. Our estimated annual effective tax rate may be subject to further uncertainty d ue to the recent changes in U.S. tax rates and tax laws .

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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