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INCOME TAXES | 12 Months Ended
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Jun. 30, 2019
INCOME TAXES [Abstract] |
INCOME TAXES | NOTE E - INCOME TAXES: Provision for income taxes from continuing operations consists of the following (in thousands):
|  | Fiscal Year Ended |
|  | June 30, 2019 |  |  | June 24, 2018 |
Current - Federal |  | $ | - |  |  | $ | (33 | )
Current - Foreign |  |  | 131 |  |  |  | 51 |
Current - State |  |  | 15 |  |  |  | 30 |
Deferred - Federal |  |  | (189 | ) |  |  | (3,370 | )
Deferred - State |  |  | (8 | ) |  |  | - |
Provision for income taxes |  | $ | (51 | ) |  | $ | (3,322 | )
The effective income tax rate varied from the statutory rate for the fiscal years ended June 30, 2019 and June 24, 2018 as reflected below (in thousands):
|  | June 30, 2019 |  |  | June 24, 2018 |
Federal income taxes based on a statutory rate of 21.0% and 27.6%, repectively of pre-tax loss |  | $ | (168 | ) |  | $ | (291 | )
State income tax, net of federal effect |  |  | 93 |  |  |  | 51 |
Foreign taxes |  |  | 15 |  |  |  | 30 |
Permanent adjustments |  |  | 8 |  |  |  | 35 |
Rate change |  |  | - |  |  |  | 3,416 |
Change in valuation allowance |  |  | - |  |  |  | (6,597 | )
Other |  |  | 1 |  |  |  | 34 |
|  | $ | (51 | ) |  | $ | (3,322 | )
The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (in thousands):
|  | June 30, 2019 |  |  | June 24, 2018 |
Current |  |  |  |  |  |
Reserve for bad debt |  | $ | 48 |  |  | $ | 36 |
Deferred fees |  |  | 17 |  |  |  | 15 |
Other reserves and accruals |  |  | 795 |  |  |  | 562 |
|  |  | 860 |  |  |  | 613 |
Non Current |  |  |  |  |  |  |  |
Credit carryforwards |  |  | 156 |  |  |  | 152 |
Net operating loss carryforwards |  |  | 5,206 |  |  |  | 5,122 |
Depreciable assets |  |  | 263 |  |  |  | 17 |
Total gross deferred tax asset |  |  | 6,485 |  |  |  | 5,904 |
Valuation allowance |  |  | (2,425 | ) |  |  | (2,425 | )
Net deferred tax asset |  | $ | 4,060 |  |  | $ | 3,479 |
At the end of tax year ended June 30, 2019, the Company had net operating loss carryforwards totaling $23.9 million that are available to reduce future taxable income and will begin to expire in 2032. Under the Tax Cuts and Jobs Act, approximately $0.3 million of the loss carryforwards are limited to 80% and do not expire. As discussed in Note A above, 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. Following the Company’s exit from substantially all Company-owned restaurants in 2017 and 2018, the Company assessed whether the valuation allowance should be maintained against its deferred tax assets based on consideration of all available evidence, using a “more likely than not” standard. In assessing the need for the valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets, including an evaluation of negative evidence consisting of the Company’s recent history of cumulative losses in recent years together with the Company’s historically profitable Pizza Inn Franchising and Pie Five Franchising operations. Based on the Company’s review of this evidence, management determined that the historical profitability of its franchising operations together with its exit from its unprofitable Company-owned restaurant operations and forecasts of future income provided sufficient basis for the Company to reverse a portion of the valuation allowance against deferred taxes during the year ended June 24, 2018. The Company will continue to monitor the realization of its tax assets each reporting period. On December 22, 2017 H.R. 1, originally known as the Tax Act was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118 (SAB 118), which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Tax Act. The measurement period ends when a company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year. Accounting for the income tax effects of the Tax Act was completed by the Company during the year ended June 24, 2018. The remeasurement of the Company’s deferred tax assets and liabilities resulted in a $3.4 million discrete tax expense which increased the effective tax rate by 1,173% in the year ended June 24, 2018.

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- 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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