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INCOME TAXES | 12 Months Ended
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Jun. 28, 2020
INCOME TAXES [Abstract] |
INCOME TAXES | NOTE F - INCOME TAXES: Provision for income taxes from continuing operations consists of the following (in thousands):
|  | Fiscal Year Ended |
|  | June 28, 2020 |  |  | June 30, 2019 |
Current - Federal |  | $ | – |  |  | $ | – |
Current - Foreign |  |  | 18 |  |  |  | 131 |
Current - State |  |  | – |  |  |  | 15 |
Deferred - Federal |  |  | 4,053 |  |  |  | (189 | )
Deferred - State |  |  | 7 |  |  |  | (8 | )
Provision for income taxes |  | $ | 4,078 |  |  | $ | (51 | )
The effective income tax rate varied from the statutory rate for the fiscal years ended June 28, 2020 and June 30, 2019 as reflected below (in thousands):
|  | June 28, 2020 |  |  | June 30, 2019 |
Federal income taxes (benefit) based on a statutory rate of 21.0% |  | $ | (33 | ) |  | $ | (168 | )
State income tax, net of federal effect |  |  | 20 |  |  |  | 93 |
Foreign taxes |  |  | – |  |  |  | 15 |
Permanent adjustments |  |  | 4 |  |  |  | 8 |
Change in valuation allowance |  |  | 4,081 |  |  |  | – |
Other |  |  | 6 |  |  |  | 1 |
|  | $ | 4,078 |  |  | $ | (51 | )
The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (in thousands):
|  | June 28, 2020 |  |  | June 30, 2019 |
Reserve for bad debt |  | $ | 61 |  |  | $ | 48 |
Deferred fees |  |  | — |  |  |  | 17 |
Other reserves and accruals |  |  | 568 |  |  |  | 795 |
Operating lease liabilities |  |  | 937 |  |  |  | — |
Credit carryforwards |  |  | 171 |  |  |  | 156 |
Net operating loss carryforwards |  |  | 5,371 |  |  |  | 5,206 |
Depreciable assets |  |  | 306 |  |  |  | 263 |
Total gross deferred tax asset |  |  | 7,414 |  |  |  | 6,485 |
Valuation allowance |  |  | (6,515 | ) |  |  | (2,425 | )
Total deferred tax asset |  | $ | 899 |  |  | $ | 4,060 |
Right-of-use asset |  |  | (815 | ) |  |  | — |
Other deferred tax liabilities |  |  | (84 | ) |  |  | — |
Total deferred tax liabilities |  | $ | (899 | ) |  | $ | — |
Net deferred tax asset |  | $ | — |  |  | $ | 4,060 |
For the year ended June 28, 2020, the Company recorded an income tax expense of $4.1 million including federal deferred tax expense of $4.1 million and current state tax expense of $20 thousand. As of June 28, 2020, the Company had net operating loss carryforwards totaling $23.6 million that are available to reduce future taxable income and will begin to expire in 2032. Under the Tax Cuts and Jobs Act, approximately $0.8 million of the loss carryforwards are limited to 80% and do not expire. 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. In assessing the need for a valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets. Future sources of taxable income are also considered in determining the amount of the recorded valuation allowance. During the quarter ending March 29, 2020, it was determined that the valuation allowance on deferred tax assets should be increased by $4.3 million resulting in a full valuation allowance. The Company has maintained the full valuation allowance for the year ended June 28, 2020. On March 27, 2020, President Trump signed into law the CARES Act. The legislation enacts various measures to assist companies affected by the COVID-19 pandemic. Key income tax-related provisions of the bill include temporary modifications to net operating loss utilization and carryback limitations, allowance of refundable alternative minimum tax credits, reduced limitation of charitable contributions, reduced limitations of business interest expense, and technical corrections to depreciation of qualified improvement property.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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