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Income Taxes | 12 Months Ended
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Feb. 02, 2019
Income Taxes |
Income Taxes | (6) Income Taxes Income tax expense for fiscal 2018, 2017 and 2016 consists of the following (in thousands):
|  | 2018 |  | 2017 |  | 2016 |
Current: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (4,326) |  | $ | (5,249) |  | $ | (3,759) |
State |  |  | (1,390) |  |  | (948) |  |  | (779) |
Total current |  |  | (5,716) |  |  | (6,197) |  |  | (4,538) |
Deferred: |  |  |  |  |  |  |  |  |  |
Federal |  |  | 619 |  |  | (3,078) |  |  | (1,541) |
State |  |  | 143 |  |  | 349 |  |  | 59 |
Total deferred |  |  | 762 |  |  | (2,729) |  |  | (1,482) |
Total income tax expense |  | $ | (4,954) |  | $ | (8,926) |  | $ | (6,020) |
Income tax expense computed using the federal statutory rate is reconciled to the reported income tax expense as follows for fiscal 2018, 2017 and 2016 (in thousands):
|  | 2018 |  | 2017 |  | 2016 |
Statutory rate applied to income before income taxes |  | $ | (5,529) |  | $ | (7,924) |  | $ | (6,773) |
Revaluation of net deferred tax assets due to the Tax Cuts and Jobs Act |  |  | — |  |  | (1,925) |  |  | — |
State income taxes, net of federal benefit |  |  | (1,250) |  |  | (549) |  |  | (903) |
State tax credits |  |  | 276 |  |  | 252 |  |  | 226 |
State tax credits - valuation allowance (net of federal benefit) |  |  | 10 |  |  | (79) |  |  | — |
Tax exempt interest |  |  | 16 |  |  | 24 |  |  | 20 |
General business credits |  |  | 1,409 |  |  | 1,273 |  |  | 1,605 |
Excess tax benefits from stock based compensation |  |  | 140 |  |  | 70 |  |  | — |
Other |  |  | (26) |  |  | (68) |  |  | (195) |
Income tax expense |  | $ | (4,954) |  | $ | (8,926) |  | $ | (6,020) |
The components of deferred tax assets and deferred tax liabilities as of February 2, 2019 and February 3, 2018 are as follows (in thousands):
|  | February 2, |  | February 3, |
|  | 2019 |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |
Deferred rent amortization |  | $ | 652 |  | $ | 558 |
Inventory capitalization |  |  | 1,953 |  |  | 1,863 |
Book and tax depreciation differences |  |  | 853 |  |  | 312 |
Vacation liability |  |  | 653 |  |  | 585 |
State tax credits |  |  | 2,863 |  |  | 2,676 |
Stock compensation |  |  | 843 |  |  | 834 |
Legal expense reserve |  |  | 178 |  |  | 73 |
Insurance liabilities |  |  | 319 |  |  | 537 |
Other |  |  | 412 |  |  | 342 |
Subtotal deferred tax assets |  |  | 8,726 |  |  | 7,780 |
Less: State tax credits valuation allowance - net |  |  | (1,615) |  |  | (1,624) |
Total deferred tax assets |  |  | 7,111 |  |  | 6,156 |
Deferred tax liabilities: |  |  |  |  |  |  |
Prepaid expenses |  |  | (572) |  |  | (379) |
Total deferred tax liabilities |  |  | (572) |  |  | (379) |
Net deferred tax asset |  | $ | 6,539 |  | $ | 5,777 |
The Company files income tax returns in U.S. federal and state jurisdictions where it does business and is subject to examinations by the Internal Revenue Service (“IRS”) and other taxing authorities. With a few exceptions, the Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years prior to fiscal 2013. The Company reviews and assesses uncertain tax positions, if any, with recognition and measurement of tax benefit based on a “more-likely-than-not” standard with respect to the ultimate outcome, regardless of whether this assessment is favorable or unfavorable. As of February 2, 2019, there were no benefits taken on the Company’s income tax returns that do not qualify for financial statement recognition. If a tax position does not meet the minimum statutory threshold to avoid payment of penalties and interest, a company is required to recognize an expense for the amount of the interest and penalty in the period in which the company claims or expects to claim the position on its tax return. For financial statement purposes, companies are allowed to elect whether to classify such charges as either income tax expense or another expense classification. Should such expense be incurred in the future, the Company will classify such interest as a component of interest expense and penalties as a component of income tax expense. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible and income tax credits may be utilized, management believes it is more likely than not that the Company will realize the benefits of these deductible differences with the exception of certain tax credits available in one state. Beginning in 2011, the Company concluded that its ability to utilize a portion of such state’s tax credits was no longer more likely than not. Such recognition resulted in the establishment of a valuation allowance which necessitated a charge to income tax expense and a reduction in deferred tax assets. Subsequent to 2011, the Company has continued to earn such state credits and has further adjusted the related valuation allowance. At February 2, 2019, the valuation allowance, net of federal tax benefit, totaled $1.6 million. The effective income tax rate for fiscal 2018, 2017 and 2016 included the recognition of benefits arising from various federal and state tax credits. Under current IRS and state income tax regulations, these credits may be carried back for one year or carried forward for periods up to 20 years. The income tax benefit included $1.7 million related to such credits in fiscal 2018, $1.3 million related to such credits in fiscal 2017 and $1.8 million related to such credits in fiscal 2016. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax reform legislation. The legislation was effective January 1, 2018 and made significant changes to U.S. tax law including a reduction in the corporate income tax rate, changes to net operating loss carryforwards and carrybacks, and a repeal of the corporate alternative minimum tax. The legislation reduced the federal statutory tax rate from 35% to 21% and required corporations with fiscal years spanning periods before and after the effective date to use a blended federal tax rate for fiscal years which include January 1, 2018. As a result of the provision requiring a blended rate, the Company’s federal statutory rate was reduced from 35% to 33.7% with a commensurate reduction in income tax expense of $0.3 million for fiscal 2017. In addition, the Company was required to revalue its deferred tax assets and liabilities to reflect the reduced federal income tax rate expected to be in effect at the time of future reversals. Such revaluation resulted in the reduction of net deferred tax assets and a charge to income tax expense in the fourth quarter of 2017 of $1.9 million. The other provisions of the Tax Cuts and Jobs Act did not have a material impact on the fiscal 2017 consolidated financial statements. In 2018, the Company’s effective income tax rate was significantly lower than previous years due to the reduction in the federal statutory tax rate.

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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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