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Income Taxes
 12 Months Ended
Nov. 01, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 4 - Income Taxes:

 

The (benefit on) provision for income taxes include the following:

 

   November 1, 2024   November 3, 2023 
   (52 Weeks)   (53 Weeks) 
Current:          
Federal  $(1,163)  $1,660 
State   1,196    (8)
Current tax expense benefit   33    1,652 
Deferred:          
Federal   (1,222)   (530)
State   (122)   (101)
Deferred tax expense benefit   (1,344)   (631)
Total (benefit on) provision for income taxes  $(1,311)  $1,021 

 

 

The total tax benefit differs from the expected amount computed by applying the statutory federal income tax rate to income before income taxes as follows:

 

   November 1, 2024   November 3, 2023 
   (52 Weeks)   (53 Weeks) 
(Benefit on) provision for federal income taxes at the applicable statutory rate  $(985)  $944 
Increase (decrease) in provision resulting from state income taxes, net of federal income tax benefit   (16)   (86)
Non-taxable life insurance gain   (421)   (93)
Other, net   111    256 
(Benefit on) provision for income taxes  $(1,311)  $1,021 

 

Deferred income taxes result from differences in the basis of assets and liabilities for tax and accounting purposes.

 

   November 1, 2024   November 3, 2023 
Receivables allowance  $29   $64 
Returns allowance   134    167 
Inventory packaging reserve   677    299 
Inventory overhead capitalization   314    571 
Employee benefits   790    726 
Other   218    (30)
State taxes payable (receivable)   226    232 
Incentive compensation   595    824 
Pension and health care benefits   77    924 
Depreciation   (12,069)   (12,342)
Net operating loss carry-forward and credits   1,721    322 
Right of use assets   (235)   - 
Valuation allowance established against state NOL   (99)   (99)
Deferred income taxes, net  $(7,622)  $(8,342)

 

Management is required to evaluate whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and reversals of existing taxable temporary differences.

 

As of November 1, 2024, the Company did not have any valuation allowance against its federal net deferred tax assets. Management reevaluated the need for a valuation allowance at the end of 2023 and determined that some of its California NOL may not be utilized. Therefore, a valuation allowance of $99 has been retained for such portion of the California NOL.

 

As of November 1, 2024, the Company had net operating loss carryforwards of approximately $5,000 for federal and $12,800 for state purposes.

 

The state loss carryforwards will expire at various dates through 2040.

 

In July 2006, the FASB issued guidance to clarify the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This interpretation prescribed a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance also discussed derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The cumulative effect, if any, of applying this guidance is to be reported as an adjustment to the opening balance of retained earnings in the year of adoption. The provisions of this guidance have been incorporated into ASC 740-10.

 

As of November 1, 2024, we have provided a liability of $349 to unrecognized tax benefits related to various federal and state income tax matters. $76 of this liability will reduce our effective income tax rate if the asset is recognized in future reporting periods. We have not identified any new unrecognized tax benefits.

 

As of November 3, 2023, we have provided a liability of $331 to unrecognized tax benefits related to various federal and state income tax matters. None of this liability will reduce our effective income tax rate if the asset is recognized in future reporting periods.

 

 

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

 

   November 1, 2024   November 3, 2023 
   (52 Weeks)   (53 Weeks) 
         
Balance at beginning of year  $331   $299 
Additions based on tax positions related to the current year   -    16 
Additions for tax positions of prior years   18    16 
           
Balance at end of year  $349   $331 

 

We recognize any future accrued interest and penalties related to unrecognized tax benefits in income tax expense. As of November 1, 2024, we had approximately $61 in accrued interest and penalties which is included as a component of the $349 unrecognized tax benefit noted above.

 

Our federal income tax returns are open to audit under the statute of limitations for the fiscal year ended October 29, 2021, through November 3, 2023.

 

We are subject to income tax in California and various other state taxing jurisdictions. Our state income tax returns are open to audit under the statute of limitations for the fiscal years ended October 30, 2020, through November 3, 2023.

 

We do not anticipate a significant change to the total amount of unrecognized tax benefits within the next 12 months.