Income Taxes

3 Months Ended

May 01, 2021

Note 14 – Income Taxes

Our effective tax rates are as follows:


	First Quarter Ended

Fiscal 2022		(62.0	)%
Fiscal 2021		(37.6	)%

We determine our estimated annual effective tax rate at the end of each interim period based on full-year forecasted

pre-tax

income and facts known at that time. The estimated annual effective tax rate is applied to the

year-to-date

pre-tax

income at the end of each interim period with the cumulative effect of any changes in the estimated annual effective tax rate being recorded in the fiscal quarter in which the change is determined. The tax effect of significant unusual items is reflected in the period in which they occur.

During the three months ended May 1, 2021, we recognized an income tax benefit of approximately $227,000. The effective tax rate in this period was directly impacted by a $276,000 tax benefit related to the expiration of the statute of limitations on a previously uncertain tax position and a $37,000 tax benefit arising from windfall tax benefits related to the Company’s stock. During the three months ended May 2, 2020, we recognized an income tax benefit of approximately $118,000. The effective tax rate in this period was directly impacted by a reduction in forecasted operating results for fiscal 2021 and a $78,000 tax benefit related to the reversal of previously uncertain tax positions due to the finalization of an IRS audit.

Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial reporting purposes. As of May 1, 2021, our cumulative unrecognized tax benefits totaled $221,000 compared to $384,000 as of January 31, 2021. Besides the expiration of the statute of limitations on a previously uncertain tax position, there were no

other developments affecting unrecognized tax benefits during the quarter ended May 1, 2021.

- 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.

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