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Income Taxes | 12 Months Ended
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Jan. 03, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | 12. Income Taxes Pre-tax book income (loss) from continuing operations was comprised of the following:
|  | FY 2014 Year Ended January 3, 2015 |  |  | FY 2013 Year Ended December 28, 2013 |  |  | FY 2012 Year Ended December 29, 2012 |
United States |  | $ | 1,332 |  |  | $ | 2,262 |  |  | $ | (270 | )
Foreign |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 1,332 |  |  | $ | 2,262 |  |  | $ | (270 | )
The (benefit from) provision for income taxes from continuing operations includes:
|  | FY 2014 Year Ended January 3, 2015 |  |  | FY 2013 Year Ended December 28, 2013 |  |  | FY 2012 Year Ended December 29, 2012 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 54 |  |  | $ | 11 |  |  | $ | (114 | )
State |  |  | 16 |  |  |  | 20 |  |  |  | 14 |
|  |  | 70 |  |  |  | 31 |  |  |  | (100 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (7,862 | ) |  |  | — |  |  |  | — |
State |  |  | (914 | ) |  |  | — |  |  |  | — |
|  |  | (8,776 | ) |  |  | — |  |  |  | — |
(Benefit from) provision for income taxes |  | $ | (8,706 | ) |  | $ | 31 |  |  | $ | (100 | )
The Company’s effective tax rate differs from the statutory federal income tax rate as shown in the following schedule:
|  | FY 2014 Year Ended January 3, 2015 |  |  | FY 2013 Year Ended December 28, 2013 |  |  | FY 2012 Year Ended December 29, 2012 |
Income tax provision at statutory rate |  |  | 34.0 | % |  |  | 34.0 | % |  |  | 34.0 | %
State income taxes, net of federal benefit |  |  | (68.0 | %) |  |  | (13.3 | %) |  |  | (88.1 | %)
Permanent differences |  |  | (1.1 | %) |  |  | (17.0 | %) |  |  | (89.1 | %)
Research and development credits |  |  | (2.6 | %) |  |  | 0.0 | % |  |  | 0.0 | %
Change in valuation allowance |  |  | (613.5 | %) |  |  | (2.3 | %) |  |  | 180.3 | %
Other |  |  | (2.4 | %) |  |  | 0.0 | % |  |  | 0.0 | %
Effective tax rate |  |  | (653.6 | %) |  |  | 1.4 | % |  |  | 37.1 | %
The tax effect of temporary differences and carryforwards that give rise to significant portions of the net deferred tax assets are presented below (in thousands):
|  | FY 2014 January 3, 2015 |  |  | FY 2013 December 28, 2013 |
Accruals and reserves |  | $ | 1,681 |  |  | $ | 1,792 |
Deferred revenue |  |  | 113 |  |  |  | 91 |
Fixed assets |  |  | 439 |  |  |  | 423 |
Intangibles |  |  | 825 |  |  |  | 441 |
Stock compensation |  |  | 676 |  |  |  | 696 |
Net operating loss |  |  | 4,278 |  |  |  | 5,224 |
Research and development credits |  |  | 1,575 |  |  |  | 1,260 |
Other tax credits |  |  | 94 |  |  |  | 47 |
Net deferred tax asset |  | $ | 9,681 |  |  | $ | 9,974 |
Valuation allowance |  |  | (905 | ) |  |  | (9,974 | )
Net deferred tax assets |  | $ | 8,776 |  |  | $ | — |
The Company's accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of the Company's deferred tax assets. Assessing the realizability of deferred tax assets is dependent upon several factors, including the likelihood and amount, if any, of future taxable income in relevant jurisdictions during the periods in which those temporary differences become deductible. The Company's management forecasts taxable income by considering all available positive and negative evidence including its history of operating income or losses and its financial plans and estimates which are used to manage the business. These assumptions require significant judgment about future taxable income. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are reduced. In the fourth quarter of fiscal year 2014, the Company's management determined, based on the Company's recent history of earnings coupled with its forecasted profitability that it is more likely than not that all of its federal and the majority of its state deferred tax assets will be realized in the foreseeable future. Accordingly, in the fourth quarter of fiscal year 2014, the Company released $9.2 million of valuation allowance. As of January 3, 2015, the Company had federal and state net operating loss (“NOL”) carryforwards of $12.5 million and $14.5 million, respectively. Of the total NOL carryover, $2 million for federal and $2.1 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 Tax Increase Prevention Act of 2014, enacted on December 19, 2014, provided for one-year extension of the research and development credit through 2014. As of January 3, 2015, the Company had federal and state research credit carryforwards of approximately $1.3 million and $1.9 million, respectively, available to offset future tax liabilities. The federal credits will begin expiring in 2026 if not used. The state research credits do not expire. The above NOL and research and development credits are subject to IRC sections 382 and 383. In the event of a change in ownership as defined by these code sections, the usage of the above mentioned NOL’s and credits may be limited. The Company accounts for uncertain tax positions in accordance with ASC 740. 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 interest and penalties related to unrecognized tax benefits as a component of income tax expense. There were no accrued interest and penalties during the year ended January 3, 2015. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | FY 2014 Year Ended January 3, 2015 |  |  | FY 2013 Year Ended December 28, 2013 |  |  | FY 2012 Year Ended December 29, 2012 |
Balance at the beginning of the year |  | $ | 1,027 |  |  | $ | 954 |  |  | $ | 1,191 |
Additions based upon tax positions related to the current year |  |  | 53 |  |  |  | 48 |  |  |  | 36 |
Additions based upon tax positions related to the prior year |  |  | 51 |  |  |  | 25 |  |  |  | — |
Reductions based upon tax positions related to the prior year |  |  | (270 | ) |  |  | — |  |  |  | (273 | )
Balance at the end of the year |  | $ | 861 |  |  | $ | 1,027 |  |  | $ | 954 |
Recognition of the unrecognized tax benefits of $861 thousand as of January 3, 2015 would affect the Company’s effective tax rate. The Company does not anticipate any material change in its unrecognized tax benefits of $861 thousand 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 2009 to 2014 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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