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INCOME TAXES | 12 Months Ended
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Sep. 28, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXESOn December 22, 2017, the U.S. government enacted comprehensive tax reform commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). Under Accounting Standards Codification (“ASC”) 740, the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. The TCJA makes broad and complex changes to the U.S. tax code, including, but not limited to: (1) reducing the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018; (2) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (3) accelerated expensing on certain qualified property; (4) creating a new limitation on deductible interest expense to 30% of tax adjusted EBITDA through 2021 and then 30% of tax adjusted EBIT thereafter; (5) eliminating the corporate alternative minimum tax; and (6) further limitations on the deductibility of executive compensation under IRC §162(m) for tax years beginning after December 31, 2017. As the reduction in the U.S. federal corporate tax rate is administratively effective on January 1, 2018, our blended U.S. federal tax rate for the year ended September 29, 2018 was approximately 24%. In connection with the TCJA, the Company recorded an income tax benefit of $1,382,000 related to the re-measurement of our deferred tax assets and liabilities for the reduced U.S. federal corporate tax rate of 21%. The Company’s accounting for the TCJA was complete as of September 29, 2018 with no significant differences from our provisional estimates. The provision for income taxes consists of the following:
| Year Ended |  |
| September 28, 2019 |  | September 29, 2018
| (in thousands) |  |
Current provision (benefit): |  |  |
Federal | $ | 260 |  |  | $ | 30 |
State and local | 267 |  |  | 320 |
| 527 |  |  | 350 |
Deferred provision (benefit): |  |  |
Federal | (931) |  |  | (798) |
State and local | (187) |  |  | (699) |
| (1,118) |  |  | (1,497) |
| $ | (591) |  |  | $ | (1,147) |
The effective tax rate differs from the U.S. income tax rate as follows:
| Year Ended |  |
| September 28, 2019 |  | September 29, 2018
| (in thousands) |  |
Provision at Federal statutory rate (21% in 2019 and 24% in 2018) | $ | 393 |  |  | $ | 953 |
State and local income taxes, net of tax benefits | (160) |  |  | — |
Tax credits | (1,029) |  |  | (789) |
Income attributable to non-controlling interest | 45 |  |  | (102) |
Changes in tax rates | 2 |  |  | 181 |
Impact of Federal tax reform | — |  |  | (1,382) |
Change in valuation allowance | 81 |  |  | (43) |
Other | 77 |  |  | 35 |
| $ | (591) |  |  | $ | (1,147) |
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
| September 28, 2019 |  | September 29, 2018
| (in thousands) |  |
Deferred tax assets: |  |  |
State net operating loss carryforwards | $ | 4,406 |  |  | $ | 4,141 |
Operating lease deferred credits | 422 |  |  | 513 |
Deferred compensation | 313 |  |  | 364 |
Tax credits | 1,253 |  |  | 802 |
Partnership investments | 347 |  |  | — |
Other | — |  |  | 98 |
Deferred tax assets, before valuation allowance | 6,741 |  |  | 5,918 |
Valuation allowance | (392) |  |  | (311) |
Deferred tax assets, net of valuation allowance | 6,349 |  |  | 5,607 |
Deferred tax liabilities: |  |  |
Depreciation and amortization | (2,049) |  |  | (2,080) |
Partnership investments | — |  |  | (329) |
Prepaid expenses | (194) |  |  | (210) |
Deferred tax liabilities | (2,243) |  |  | (2,619) |
Net deferred tax assets | $ | 4,106 |  |  | $ | 2,988 |
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. In the assessment of the valuation allowance, appropriate consideration was given to all positive and negative evidence including recent operating profitability, forecasts of future earnings and the duration of statutory carryforward periods. The Company recorded a valuation allowance of $392,000 and $311,000 as of September 28, 2019 and September 29, 2018, respectively, attributable to state and local net operating loss carryforwards which are not realizable on a more-likely-than-not basis. During the year ended September 28, 2019, the Company’s valuation allowance increased by approximately $81,000 as the Company determined that certain state net operating losses became unrealizable on a more-likely-than-not basis. As of September 28, 2019, the Company had General Business Credit carryforwards of approximately $1,117,000 which expire through fiscal 2039. In addition, as of September 28, 2019, the Company has New York State net operating loss carryforwards of approximately $23,061,000 and New York City net operating loss carryforwards of approximately $21,576,000 that expire through fiscal 2039. A reconciliation of the beginning and ending amount of unrecognized tax benefits excluding interest and penalties is as follows:
| September 28, 2019 |  | September 29, 2018
| (in thousands) |  |
Balance at beginning of year | $ | 110 |  |  | $ | 152 |
Additions based on tax positions taken in current and prior years | 407 |  |  | 125 |
Settlements | (205) |  |  | (167) |
Lapse in statute of limitations | (109) |  |  | — |
Decreases based on tax positions taken in prior years | (45) |  |  | — |
Balance at end of year | $ | 158 |  |  | $ | 110 |
The entire amount of unrecognized tax benefits if recognized would reduce our annual effective tax rate. For the years ended September 28, 2019 and September 29, 2018, the Company has $0 and $38,000, respectively, accrued for the payment of interest and penalties. The Company does not expect a significant change to its unrecognized tax benefits within the next 12 months. The Company files tax returns in the U.S. and various state and local jurisdictions with varying statutes of limitations. The 2016 through 2019 fiscal years remain subject to examination by the Internal Revenue Service and most state and local tax authorities.

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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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