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Note 15 - Income Taxes | 12 Months Ended
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Jan. 03, 2026
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
15. | INCOME TAXES
The components of earnings before income taxes by United States and foreign jurisdictions were as follows:
|  | Fiscal Years Ended |
|  | January 3, 2026 |  |  | December 28, 2024 |
United States |  | $ | 17,192 |  |  | $ | 16,607 |
Foreign jurisdictions |  |  | 4,880 |  |  |  | 3,583 |
|  | $ | 22,072 |  |  | $ | 20,190 |
The components of income tax expense (benefit) are as follows:
|  | Fiscal Years Ended |
|  | January 3, 2026 |  |  | December 28, 2024 |
Current |  |  |  |  |  |  |  |
Federal |  | $ | 1,619 |  |  | $ | 2,609 |
State and local |  |  | 1,556 |  |  |  | 611 |
Foreign |  |  | 1,302 |  |  |  | 942 |
|  |  | 4,477 |  |  |  | 4,162 |
Deferred |  |  |  |  |  |  |  |
Federal |  |  | 662 |  |  |  | 2,343 |
State |  |  | 485 |  |  |  | 611 |
Foreign |  |  | 114 |  |  |  | (253 | )
|  |  | 1,261 |  |  |  | 2,701 |
Total |  | $ | 5,738 |  |  | $ | 6,863 |
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, German and Serbian pretax income, versus United States pretax income. The consolidated effective income tax rate for the fiscal years ended January 3, 2026 and December 28, 2024 were 26.0% and 34.0%, respectively. The Company’s United States Federal statutory tax rate for the fiscal years ended January 3, 2026 and December 28, 2024, before any adjustments, was 21.0%. The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the fifty-three weeks ended January 3, 2026, updated for the new guidelines within ASU 2023-09, which the Company adopted prospectively:
|  | Amount |  |  | % of Earnings Before Taxes |
Tax expense on taxable income at federal statutory rate |  | $ | 4,635 |  |  |  | 21.0 |
State income taxes, net of federal benefit |  |  | 1,694 |  |  |  | 7.7 |
Permanent differences, domestic |  |  |  |  |  |  |  |
Section 162(m) disallowance |  |  | 504 |  |  |  | 2.2 |
Other Permanent differences, domestic |  |  | 16 |  |  |  | 0.1 |
Foreign income taxes |  |  | 392 |  |  |  | 1.8 |
Changes in unrecognized tax benefit |  |  | (1,196 | ) |  |  | (5.4 | )
Other |  |  | (307 | ) |  |  | (1.4 | )
Total income tax expense |  | $ | 5,738 |  |  |  | 26.0 |
The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the fifty-two weeks ended December 28, 2024, prior to application of ASU 2023-09:
|  | Amount |  |  | % of Earnings Before Taxes |
Tax expense on taxable income at federal statutory rate |  | $ | 4,240 |  |  |  | 21.0 |
State income taxes, net of Federal income tax benefit |  |  | 1,164 |  |  |  | 5.8 |
Permanent differences, domestic and foreign |  |  | 188 |  |  |  | 0.9 |
Intangible asset deferred liability true-up |  |  | 797 |  |  |  | 4.0 |
Foreign income tax rates |  |  | 108 |  |  |  | 0.5 |
Foreign tax adjustment |  |  | 174 |  |  |  | 0.9 |
Changes in unrecognized tax benefit |  |  | - |  |  |  | - |
Other |  |  | 192 |  |  |  | 0.9 |
Total income tax expense |  | $ | 6,863 |  |  |  | 34.0 |
At January 3, 2026 and December 28, 2024, deferred tax assets and liabilities consist of the following:
|  | January, 2026 |  |  | December 28, 2024 |
Deferred tax assets: |  |  |  |  |  |  |  |
Provision for credit losses |  | $ | 341 |  |  | $ | 400 |
Federal and state net operating loss carryforward |  |  | 16 |  |  |  | 41 |
Compensation |  |  | 976 |  |  |  | 836 |
Reserves, accruals, and other |  |  | - |  |  |  | 461 |
Lease liability |  |  | 1,176 |  |  |  | 1,304 |
Foreign deferred tax asset |  |  | 6 |  |  |  | 120 |
Total deferred tax assets |  |  | 2,515 |  |  |  | 3,162 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangible assets, net of amortization |  |  | (4,558 | ) |  |  | (4,272 | )
Prepaid expense deferral |  |  | (1,271 | ) |  |  | (1,146 | )
Fixed assets, net of depreciation |  |  | (1,226 | ) |  |  | (906 | )
Right of use assets |  |  | (1,127 | ) |  |  | (1,244 | )
Total deferred tax liabilities |  |  | (8,182 | ) |  |  | (7,568 | )
Total deferred tax liabilities, net |  | $ | (5,667 | ) |  | $ | (4,406 | )
The components of cash paid for income taxes, net of refunds, in United States and foreign jurisdictions for the fifty-three weeks ended January 3, 2026 were as follows:
Federal |  | $ | 3,566 |
New York City |  |  | 334 |
Other states (1) |  |  | 837 |
Canada |  |  | 1,038 |
Other foreign jurisdictions |  |  | 330 |
|  | $ | 6,105 |
| (1) | New York and California made up the majority of the tax effect in this category.
A reconciliation of the unrecognized tax benefits for the fiscal years ended January 3, 2026 and December 28, 2024:
Unrecognized Tax Benefits |  |  |  |
Balance as of December 30, 2023 |  | $ | 1,196 |
Gross increases: tax positions in prior period |  |  | - |
Gross increases: tax positions in current period |  |  | - |
Balance as of December 28, 2024 |  | $ | 1,196 |
Gross increases: tax positions in prior period |  |  | - |
Gross increases: tax positions in current period |  | $ | (1,196 | )
Balance as of January 3, 2026 |  | $ | - |
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 tax expense. The Company recorded minimal expense for penalties or interest in the fiscal years ended January 3, 2026 and December 28, 2024. The Company has gross state net operating losses of $0.2 million to the net income of future tax returns. The state net operating losses are subject to various expiration periods. The Company conducts its operations in multiple tax jurisdictions in the United States, Canada, Germany, Philippines, 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 has no open Federal audits as of January 3, 2026. Except for limited exceptions, the Company is no longer subject to audits by state and local tax authorities for tax years prior to 2021. The Company is no longer subject to audit in Canada for the tax years prior to tax year 2021. The Company is no longer subject to audit in Puerto Rico for the tax years prior to tax year 2020. Under APB 23, foreign earnings are generally not subject to U.S. tax until repatriated or deemed repatriated under the anti-deferral rules. The Company has determined that as of January 3, 2026, all current and future earnings in its foreign subsidiaries will be permanently reinvested. Based on this determination, the anti-deferral rules have no material impact on the Company.

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