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Income Taxes
 6 Months Ended
Dec. 25, 2016
Income Taxes:  
Income Taxes

(6)           Income Taxes

 

For the three months ended December 25, 2016, income tax expense represents an income tax benefit of $2.7 million calculated at a rate consistent with the 34% statutory U.S. federal rate offset by an income tax expense of $2.7 million related to a valuation allowance for deferred tax assets of $2.7 million and state taxes of $5,000.  For the three months ended December 27, 2015, income tax expense was $2.9 million. 

 

The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. The Company continues to record a full valuation allowance against its net deferred tax assets. The Company assessed whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a "more likely than not" standard. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered in determining the amount of the recorded valuation allowance.  Based on the Company's review of this evidence at December 25, 2016, management determined that a valuation allowance against all of the Company's deferred tax assets accruing during the second quarter of fiscal 2017 was appropriate.  There was approximately $8.2 million of deferred tax assets at December 25, 2016.