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Income Taxes | 12 Months Ended
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Dec. 28, 2013
Income Taxes | 13. Income Taxes Pre-tax book income (loss) from continuing operations was comprised of the following:
|  | FY 2013 Year Ended December 28, 2013 |  |  | FY 2012 Year Ended December 29, 2012 |  |  | FY 2011 Year Ended December 31, 2011 |
United States |  | $ | 2,262 |  |  | $ | (270 | ) |  | $ | 2,438 |
Foreign |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 2,262 |  |  | $ | (270 | ) |  | $ | 2,438 |
The provision for (benefit from) income taxes from continuing operations includes:
|  | FY 2013 Year Ended December 28, 2013 |  |  | FY 2012 Year Ended December 29, 2012 |  |  | FY 2011 Year Ended December 31, 2011 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 11 |  |  | $ | (114 | ) |  | $ | 267 |
State |  |  | 20 |  |  |  | 14 |  |  |  | 30 |
Foreign |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 31 |  |  |  | (100 | ) |  |  | 297 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Provision for (benefit from) income taxes |  | $ | 31 |  |  | $ | (100 | ) |  | $ | 297 |
The Company’s effective tax rate differs from the statutory federal income tax rate as shown in the following schedule:
|  | FY 2013 Year Ended December 28, 2013 |  |  | FY 2012 Year Ended December 29, 2012 |  |  | FY 2011 Year Ended December 31, 2011 |
Income tax provision at statutory rate |  |  | 34.0 | % |  |  | 34.0 | % |  |  | 34.0 | %
State income taxes, net of federal benefit |  |  | (13.3 | %) |  |  | (88.1 | %) |  |  | (2.0 | %)
Permanent differences |  |  | (17.0 | %) |  |  | (89.1 | %) |  |  | 0.0 | %
Research and development credits |  |  | 0.0 | % |  |  | 0.0 | % |  |  | (3.8 | %)
Change in valuation allowance |  |  | (2.3 | %) |  |  | 180.3 | % |  |  | (15.8 | %)
Effective tax rate |  |  | 1.4 | % |  |  | 37.1 | % |  |  | 12.4 | %
The tax effect of temporary differences and carry forwards that give rise to significant portions of the net deferred tax assets are presented below (in thousands):
|  | FY 2013 December 28, 2013 |  |  | FY 2012 December 29, 2012 |
Accruals and reserves |  | $ | 1,792 |  |  | $ | 2,295 |
Deferred revenue |  |  | 91 |  |  |  | 38 |
Fixed assets |  |  | 423 |  |  |  | 429 |
Intangibles |  |  | 441 |  |  |  | 180 |
Stock compensation |  |  | 696 |  |  |  | 753 |
Net operating loss |  |  | 5,224 |  |  |  | 5,310 |
Research and development credits |  |  | 1,260 |  |  |  | 1,008 |
Other tax credits |  |  | 47 |  |  |  | 47 |
Other |  |  | — |  |  |  | 1 |
Net deferred tax asset |  | $ | 9,974 |  |  | $ | 10,061 |
Valuation allowance |  |  | (9,974 | ) |  |  | (10,061 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
The Company has recorded a full valuation allowance for its deferred tax assets based on its past losses and the uncertainty regarding the ability to project future taxable income. The valuation allowance decreased by $87 thousand in 2013, $1.6 million in 2012, and $414 thousand in 2011. As of December 28, 2013, the Company had federal and state net operating loss (“NOL”) carryforwards of $13.9 million and $14.1 million, respectively. Of the total NOL carryforwards, $0.6 million for federal and $0.4 million for states, relate to windfall stock option deductions which, when realized, will be credited to equity. The federal NOL will begin to expire in 2032 and the state NOL will begin to expire in 2020, in each case if not used. The American Taxpayer Relief Act of 2012 was enacted on January 2, 2013. The Act extended the research and development credit through 2013. As of December 28, 2013, the Company had federal and state R&D credit carryforwards of approximately $1.2 million and $1.7 million, respectively, available to offset future tax liabilities. The federal R&D credits will begin expiring in 2026 if not used. The State R&D credits do not expire. The above NOLs and research and development credits are subject to Sections 382 and 383 of the Internal Revenue Code . In the event of a change in ownership as defined by these code sections, the usage of the above mentioned NOL and R&D credits may be limited. On September 13, 2013, the IRS and Treasury Department released final regulations under Sections 162(a) and 263(a) of the IRC on the deduction and capitalization of expenditures related to tangible personal property (the final repair regulations). The entirety of the final repair regulations apply to the Company’s taxable year beginning on or after January 1, 2014. Application of these regulations is not expected to have a material impact on the Company’s consolidated financial statements. The Company accounts for uncertain tax positions in accordance with ASC 740, Income Taxes. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax provision that an entity takes or expects to take in a tax return. Additionally, ASC 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. Under ASC 740, an entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. In accordance with our accounting policy, we recognize accrued interests and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 28, 2013, the Company had accrued $67 thousand for payments of interest related to unrecognized tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | FY 2013 Year Ended December 28, 2013 |  |  | FY 2012 Year Ended December 29, 2012 |  |  | FY 2011 Year Ended December 31, 2011 |
Balance at the beginning of the year |  | $ | 954 |  |  | $ | 1,191 |  |  | $ | 865 |
Additions based upon tax positions related to the current year |  |  | 48 |  |  |  | 36 |  |  |  | 58 |
Additions based upon tax positions related to the prior year |  |  | 25 |  |  |  | — |  |  |  | 268 |
Reductions based upon tax positions related to the prior year |  |  | — |  |  |  | (273 | ) |  |  | — |
Balance at the end of the year |  | $ | 1,027 |  |  | $ | 954 |  |  | $ | 1,191 |
If the ending balance of $1.0 million of unrecognized tax benefits as of December 28, 2013 were recognized, none of the recognition would affect the income tax rate. The Company does not anticipate any material change in its unrecognized tax benefits of $1.0 million over the next twelve months. The unrecognized tax benefits may change during the next year for items that arise in the ordinary course of business. The Company files U.S. federal and state returns. The tax years 2008 to 2013 remain open in several jurisdictions, none of which have individual significance.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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