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Note 15 - Income Taxes | 12 Months Ended
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Dec. 30, 2017
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 15. INCOME TAXES On December 22, 2017, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118” ) directing taxpayers to consider the impact of the Tax Act as “provisional” when it does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. The changes in the Tax Act are broad and complex. The final impacts of the Tax Act may differ from the Company ’s estimates due to, among other things, changes in interpretations of the Tax Act, further legislation related to the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates to estimates the Company has utilized to calculate the impacts of the Tax Act. The SEC has issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the related tax impacts. The Company currently anticipates finalizing any resulting adjustments by the end of our next fiscal year ending December 29, 2018. The Company, based on current knowledge, did estimate the impact of SAB 118 on its income tax provision for the fifty-two week period ended December 30, 2017. The total impact was an increase to its current year tax expense of $1.2 million, including $1.0 million for a reduction in deferred tax benefit and $0.2 million related to transition repatriation taxes. Generally, the Company ’s relative income or loss generated in each of its jurisdictions can materially impact the overall effective income tax rate of the Company, particularly the ratio of Canadian and Serbian pretax income, versus U.S. pretax income. Current Canadian tax rates are approximately 26.5% and current Serbian tax rates are typically between 15.0% and 20.0%. The consolidated effective income tax rate for fiscal 2017 was 920.4% as compared to 46.8% for the comparable prior year period. Because of several unusual and large components, especially relative to the Company’s small consolidated pretax loss in dollars, the Company does not consider its fiscal 2017 effective tax rate of 920.4% to be meaningful in and of itself. In order to provide context for the consolidated effective income tax rate of the fiscal 2017, the material components of the fiscal 2017 tax provision, as delineated below, must be considered. The income tax provisions reconciled to the tax computed at the statutory Federal rate are as follows:
|  | December 3 0, 201 7 |  |  | December 31, 2016 |
Tax (benefit) expense on taxable (loss) income at statutory rate of 34.0% |  | $ | (83 | ) |  | $ | 1,123 |
State and Puerto Rico income taxes, net of Federal income tax benefit |  |  | (248 | ) |  |  | 263 |
U SA 179D and Canadian R&D tax credits |  |  | (603 | ) |  |  | - |
Permanent differences |  |  | 458 |  |  |  | 186 |
Worthless stock deduction |  |  | (2,861 | ) |  |  | - |
Foreign income tax rate s |  |  | (92 | ) |  |  | 17 |
Impact on net deferred tax assets from 2018 Federal tax rate change |  |  | 1,015 |  |  |  | - |
Transition repatriation taxes |  |  | 198 |  |  |  | - |
Other |  |  | (39 | ) |  |  | (45 | )
Total income tax (benefit) expense |  | $ | (2,255 | ) |  | $ | 1,544 |
The Company ’s statutory federal tax rate for the fifty-two weeks ended December 30, 2017 was 34.0%. The Company experienced several material events for the fifty-two week period that impacted its net income tax benefit of $2.3 million, including 1 ) state and Puerto Rico income tax benefit of $248; 2 ) a USA 179D and Canadian research and development tax credits of $603; 3 ) several permanent differences generating income tax expense of $458; 4 ) a worthless stock deduction for a subsidiary purchased in fiscal 1996 that was closed in fiscal 2017 which generated an income tax benefit of $2.9 million; 5 ) foreign tax benefit, primarily from Canada, of $369; and 5 ) as a result of the federal tax rate change in fiscal 2018 to 21%, an increase to income tax expense of $1.0 million from a reduction in deferred tax assets, net of deferred tax liabilities and $0.2 million related to transition repatriation taxes. The Company’s fiscal 2016 effective tax rate of 46.8% was unusually high due to the following reasons: 1 ) a small pretax loss in the Company’s Canadian operations; and 2 ) normal permanent differences and fixed tax rates in Puerto Rico as both items were spread over a low base of pretax income in the United States. The components of income tax expense (benefit) are as follows:
|  | Fiscal Years Ended |
|  | December 30 , 201 7 |  |  | December 31 , 2016 |
Current |  |  |  |  |  |  |  |
Federal |  | $ | (471 | ) |  | $ | 688 |
State and local |  |  | 118 |  |  |  | 402 |
Foreign |  |  | 237 |  |  |  | (3 | )
|  |  | (116 | ) |  |  | 1,087 |
Deferred |  |  |  |  |  |  |  |
Federal |  |  | (1,841 | ) |  |  | 372 |
State |  |  | (495 | ) |  |  | 108 |
Foreign |  |  | 197 |  |  |  | (23 | )
|  |  | (2,139 | ) |  |  | 457 |
Total |  | $ | (2,255 | ) |  | $ | 1,544 |
The components of earnings before income taxes by United States and foreign jurisdictions were as follows:
|  | Fiscal Years Ended |
|  | December 30 , 201 7 |  |  | December 31 , 2016 |
United States |  | $ | (1,660 | ) |  | $ | 3,430 |
Foreign Jurisdictions |  |  | 1,415 |  |  |  | (128 | )
|  | $ | (245 | ) |  | $ | 3,302 |
A reconciliation of the unrecognized tax benefits for the year December 30, 2017:
Unrecognized Tax Benefits |
Balance as of December 31, 2016 |  | $ | 628 |
Charges for current year tax positions |  |  | - |
Reserves for current year tax position |  |  | - |
Balance as of December 30, 2017 |  | $ | 628 |
The total amount of unrecognized tax benefits relating to the Company ’s tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing audits and/or the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits will not change during the next 12 months. However, changes in the occurrence, expected outcomes and timing of those events could cause the Company’s current estimate to change materially in the future. The Company accounts for penalties or interest related to uncertain tax positions as part of its provision for income taxes and records such amounts to interest expense. The Company recorded no expense for penalties or interest in the fiscal years ended December 30, 2017 and December 31, 2016. At December 30, 2017 and December 31, 2016, deferred tax assets and liabilities consist of the following:
|  | December 3 0, 201 7 |  |  | December 31, 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 235 |  |  | $ | 451 |
Federal and state net operating loss carryforward |  |  | 2,501 |  |  |  | - |
Reserves and accruals |  |  | 435 |  |  |  | 394 |
Other |  |  | 53 |  |  |  | 323 |
Total deferred tax assets |  |  | 3,224 |  |  |  | 1,168 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Acquisition amortization, net |  |  | (206 | ) |  |  | (100 | )
Prepaid expense deferral |  |  | (503 | ) |  |  | (750 | )
Bonus depreciation to be reversed |  |  | (326 | ) |  |  | (466 | )
Canada deferred tax liability, net |  |  | (431 | ) |  |  | (234 | )
Total deferred tax liabilities |  |  | (1,466 | ) |  |  | (1,550 | )
Total deferred tax (liability) asset, net |  | $ | 1,758 |  |  | $ | (382 | )
The Company conducts its operations in multiple tax jurisdictions in the United States, Canada, Puerto Rico and Serbia. The Company and its subsidiaries file a consolidated U.S. Federal income tax return and file in various states. The Company’s federal income tax returns have been examined through 2010. The Internal Revenue Service is currently examining fiscal tax years 2011, 2012, 2013 and 2015. The State of New Jersey is currently examining fiscal tax years 2009 through 2012. Except for New Jersey and other limited exceptions, the Company is no longer subject to audits by state and local tax authorities for tax years prior to 2012. The Company is no longer subject to audit in Canada for the tax years prior to tax year 2013. The Company is no longer subject to audit in Puerto Rico for the tax years prior to tax year 2007.

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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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