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INCOME TAXES | 12 Months Ended
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Sep. 29, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income tax (benefit) expense consists of the following:
(Thousands of Dollars) | 2024 |  | 2023 |  | 2022
Current Taxes: |  |  |  |  |
Federal | 2,430 |  |  | 4,528 |  |  | 4,932 |
State | 488 |  |  | (336) |  |  | 142 |
| 2,918 |  |  | 4,192 |  |  | 5,074 |
Deferred Taxes: |  |  |  |  |
Federal | (9,388) |  |  | (4,973) |  |  | (3,913) |
State | (1,140) |  |  | 432 |  |  | (463) |
| (10,528) |  |  | (4,541) |  |  | (4,376) |
Income tax expense | (7,610) |  |  | (349) |  |  | 698 |
Income tax (benefit) expense related to operations differs from the amounts computed by applying the U.S. federal income tax rate to (loss) income before income taxes. The reasons for these differences are as follows:
(Percent of (Loss) Income Before Income Taxes) | 2024 |  | 2023 |  | 2022
Computed “expected” income tax expense | 21.0 |  |  | 21.0 |  |  | 21.0 |
State income tax benefit, net of federal tax benefit | 3.8 |  |  | (5.4) |  |  | (8.9) |
Net income of associated companies | 2.3 |  |  | 31.2 |  |  | (77.2) |
Resolution of tax matters | 1.8 |  |  | 69.7 |  |  | (32.2) |
Remeasurement due to state rate changes | 2.5 |  |  | (84.0) |  |  | (11.2) |
Non-deductible expenses | (3.6) |  |  | (28.5) |  |  | 124.0 |
Provision to return adjustment | 0.4 |  |  | (0.5) |  |  | 70.2 |
Valuation allowance | (2.4) |  |  | 28.8 |  |  | (123.3) |
State net operating loss expiration | (3.0) |  |  | (12.8) |  |  | 135.2 |
Wage credit, net addback | 0.1 |  |  | — |  |  | (7.5) |
Warrant valuation | — |  |  | — |  |  | (1.9) |
Interest and penalties | (0.3) |  |  | (9.0) |  |  | — |
Recognition of basis differences | 1.6 |  |  | 7.5 |  |  | — |
Other | 0.2 |  |  | (6.7) |  |  | — |
| 24.4 |  |  | 11.3 |  |  | 88.2 |
Net deferred income tax liabilities consist of the following components:
(Thousands of Dollars) | September 29 2024 |  | September 24 2023
Deferred income tax liabilities: |  |  |
Property and equipment | (5,327) |  |  | (8,461) |
Identified intangible assets | (15,097) |  |  | (18,679) |
ASC 842 - Leases DTL | (8,308) |  |  | (9,890) |
Other | (2,145) |  |  | (2,298) |
Investments | (31,473) |  |  | (31,296) |
| (62,350) |  |  | (70,624) |
Deferred income tax assets: |  |  |
Allowance for credit losses | 1,112 |  |  | 1,655 |
Pension and postretirement benefits | 2,454 |  |  | 1,102 |
Interest deduction limitation | 16,097 |  |  | 9,828 |
Operating loss carryforwards | 25,267 |  |  | 25,749 |
ASC 842 - Leases DTA | 9,306 |  |  | 11,037 |
Other | 6,211 |  |  | 5,667 |
| 60,447 |  |  | 55,038 |
Valuation allowance | (26,500) |  |  | (25,765) |
Net deferred income tax liabilities | (28,403) |  |  | (41,351) |
A reconciliation of 2024 and 2023 changes in gross unrecognized tax benefits is as follows:
(Thousands of Dollars) | 2024 |  | 2023
Balance, beginning of year | 14,914 |  |  | 18,242 |
Changes in tax positions for prior years | 216 |  |  | (687) |
Increases (decrease) in tax positions for the current year | 837 |  |  | (347) |
Lapse in statute of limitations | (1,796) |  |  | (2,294) |
Balance, end of year | 14,171 |  |  | 14,914 |
Approximately $11.4 million and $10.7 million of the gross unrecognized tax benefit balances for 2024 and 2023, respectively, relate to state net operating losses which are netted against deferred taxes on our Consolidated Balance Sheet. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $2.2 million at September 29, 2024. The Company does not expect that unrecognized tax benefits will fluctuate significantly in the next twelve months. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. The amount of accrued interest related to unrecognized tax benefits was, net of tax, $0.5 million at September 29, 2024 and $1.2 million at September 24, 2023. There were no amounts provided for penalties at September 29, 2024 or September 24, 2023. At September 29, 2024 and September 24, 2023, we had a deferred tax asset of $16.1 million and $9.8 million, respectively, related to disallowed interest expense. The valuation allowance increased from $25.8 million in 2023 to $26.5 million in 2024. During 2024, it was determined to be more likely than not that the Company would not be able to realize all of its disallowed interest expense carryforwards. Therefore, a valuation allowance was established on the amount of the deferred tax assets determined to not be realizable. The valuation allowance decreased by $0.9 million and $1.0 million in 2023 and 2022, respectively. The Company is currently undergoing a New York Franchise Tax audit that includes fiscal year periods 2019 through 2021. Certain of the Company's state income tax returns for the year ended September 24, 2017 are open for examination. The Federal and remaining state returns are open beginning with the September 30, 2018 year. At September 29, 2024, we have state tax benefits of approximately $43.3 million in net operating loss ("NOL") carryforwards. Of the NOL balance, $41.3 million expire between 2024 and 2044 and $2.0 million have an indefinite carryforward period. These NOL carryforwards result in a deferred income tax asset of $34.2 million at September 29, 2024, a portion of which is offset by a valuation allowance.

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