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Note 15 - Income Taxes | 12 Months Ended
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Jan. 01, 2022
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 15. INCOME TAXES Generally, the Company’s relative income or loss generated in each of its jurisdictions can materially impact the consolidated effective income tax rate of the Company, particularly the ratio of Canadian and Serbian pretax income, versus United States pretax income. The consolidated effective income tax rate for fiscal 2021 was 21.0% as compared to 26.4% for the comparable prior year period. The Company’s United States Federal statutory tax rate for the fifty-two week period ended January 1, 2022 and the comparable prior year period, before any adjustments, was 21.0%. The income tax provisions reconciled to the tax computed at the United States Federal statutory rate for both fiscal 2021 and 2020 are as follows:
|  | January 1, 2022 |  |  | January 2, 2021 |
Federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | %
Tax expense on taxable (loss) income at federal statutory rate |  | $ | 2,922 |  |  | $ | (2,532 | )
State and Puerto Rico income taxes, net of Federal income tax benefit |  |  | 519 |  |  |  | (535 | )
Permanent differences domestic |  |  | (114 | ) |  |  | 154 |
Permanent differences foreign |  |  | (657 | ) |  |  | - |
Remeasurement of contingent consideration |  |  | (359 | ) |  |  | - |
Intangible asset deferred tax liability true-up |  |  | 491 |  |  |  | - |
Foreign income tax rates |  |  | 89 |  |  |  | (21 | )
Adjustments to prior year federal taxes |  |  | 46 |  |  |  | (53 | )
Other |  |  | (12 | ) |  |  | (201 | )
Total income tax expense |  | $ | 2,925 |  |  | $ | (3,188 | )
The components of income tax expense are as follows:
|  | Fiscal Years Ended |
|  | January 1, 2022 |  |  | January 2, 2021 |
Current |  |  |  |  |  |  |  |
Federal |  | $ | 47 |  |  | $ | (32 | )
State and local |  |  | 45 |  |  |  | 174 |
Foreign |  |  | 292 |  |  |  | 382 |
|  |  | 384 |  |  |  | 524 |
Deferred |  |  |  |  |  |  |  |
Federal |  |  | 2,152 |  |  |  | (2,844 | )
State |  |  | 612 |  |  |  | (851 | )
Foreign |  |  | (223 | ) |  |  | (17 | )
|  |  | 2,541 |  |  |  | (3,755 | )
Total |  | $ | 2,925 |  |  | $ | (3,188 | )
The components of earnings before income taxes by United States and foreign jurisdictions were as follows:
|  | Fiscal Years Ended |
|  | January 1, 2022 |  |  | January 2, 2021 |
United States |  | $ | 10,880 |  |  | $ | (13,898 | )
Foreign jurisdictions |  |  | 3,034 |  |  |  | 1,841 |
|  | $ | 13,914 |  |  | $ | (12,057 | )
A reconciliation of the unrecognized tax benefits for the year January 1, 2022:
Unrecognized Tax Benefits |  |  |  |
Balance as of December 28, 2019 |  |  |  |
Gross increases: tax positions in prior period |  | $ | - |
Gross increases: tax positions in current period |  | $ | - |
Balance as of January 2, 2021 |  | $ | - |
Gross increases: tax positions in prior period |  | $ | - |
Gross increases: tax positions in current period |  | $ | 1,196 |
Balance as of January 1, 2022 |  | $ | 1,196 |
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 January 1, 2022 and January 2, 2021. At January 1, 2022 and January 2, 2021, deferred tax assets and liabilities consist of the following:
|  | January 1, 2022 |  |  | January 2, 2021 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 297 |  |  | $ | 455 |
Federal and state net operating loss carryforward |  |  | 1,153 |  |  |  | 2,634 |
Reserves and accruals |  |  | 800 |  |  |  | 881 |
Lease liability |  |  | 844 |  |  |  | 1,174 |
Other |  |  | 314 |  |  |  | 318 |
Total deferred tax assets |  |  | 3,408 |  |  |  | 5,462 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Acquisition amortization, net |  |  | (1,428 | ) |  |  | (716 | )
Prepaid expense deferral |  |  | (552 | ) |  |  | (602 | )
Bonus depreciation to be reversed |  |  | (392 | ) |  |  | (280 | )
Right of use assets |  |  | (501 | ) |  |  | (564 | )
Canada deferred tax liability, net |  |  | (142 | ) |  |  | (365 | )
Total deferred tax liabilities |  |  | (3,015 | ) |  |  | (2,527 | )
Total deferred tax assets (liabilities), net |  | $ | 393 |  |  | $ | 2,935 |
The Company has gross net operating losses of $2.9 million and $8.6 million to be applied to the net income of future federal and state tax returns, respectively. The principal amount of the federal net operating loss has an unlimited life. The Company conducts business in many states. Net operating losses in these states expire at differing periods but the majority of these expire from 2038 through 2040. 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 United States Federal income tax return and file in various states. The Company’s federal income tax returns have been examined through 2017. The Company has no open federal audits as of January 1, 2022. The Company is no longer subject to audits by state and local tax authorities for tax years prior to 2018. The Company is no longer subject to audit in Canada for the tax years prior to tax year 2017. The Company is no longer subject to audit in Puerto Rico for the tax years prior to tax year 2011. The Company has no open state audits as of January 1, 2022. Differences between the effective tax rate and the applicable U.S. federal statutory rate may arise, primarily from the effect of state and local income taxes, share-based compensation, and potential tax credits available to the Company.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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