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INCOME TAXES
 12 Months Ended
Oct. 01, 2011
Income Taxes  
INCOME TAXES

NOTE 6. INCOME TAXES

 

The components of our provision for income taxes for our fiscal years 2011 and 2010 are as follows:

 

   2011  2010  
Current:          
    Federal  $502,000   $625,000 
    State   138,000    183,000 
 
Deferred:		   640,000    808,000 
    Federal   (36,000)   (29,000)
    State   (6,000)   (22,000)
    (42,000)   (51,000)
   $598,000   $757,000 

 

A reconciliation of income tax computed at the statutory federal rate to income tax expense is as follows:

 

   2011  2010  
           
 Tax provision at the statutory rate of 34%  $617,000   $823,000 
 State income taxes, net of federal income tax   85,000    102,000 
 Deferred tax benefit of tip credit generated   (200,000)   (200,000)
 Tax effect of consolidation elimination entry   76,000    5,000 
 Other   20,000    27,000 
   $598,000   $757,000 

 

We have deferred tax assets which arise primarily due to depreciation recorded at different rates for tax and book purposes offset by cost basis differences in depreciable assets due to the deferral of the recognition of insurance recoveries on casualty losses for tax purposes, investments in and management fees paid by limited partnerships, accruals for potential uninsured claims, bonuses accrued for book purposes but not paid within two and a half months for tax purposes, the capitalization of certain inventory costs for tax purposes not recognized for financial reporting purposes, the recognition of revenue from gift cards not redeemed within twelve months of issuance, allowances for uncollectable receivables, unfunded limited retirement commitments and tax credit carryforwards generated as a result of the application of alternative minimum taxes.

 

The components of our deferred tax assets at October 1, 2011 and October 2, 2010 were as follows:

 

   2011  2010  
           
Current:          
  Reversal of aged payables  $27,000   $27,000 
  Capitalized inventory costs   22,000    20,000 
  Accrued bonuses   164,000    165,000 
  Accruals for potential uninsured claims   19,000    21,000 
  Gift cards   48,000    33,000 
  JV management fees   74,000    (12,000)
  Allowance for account receivable for consolidated affiliate   —    87,000 
   $354,000   $341,000 
Long-Term:          
  Book/tax differences in property and equipment  $459,000   $434,000 
  Limited partnership investments   418,000    418,000 
  Accrued limited retirement   31,000    27,000 
   $908,000   $879,000