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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | 12. Income Taxes Income before (benefit from) provision for income taxes was comprised of the following:
|  | FY 2016 |  |  | FY 2015 |  |  | FY 2014 |
|  | Year Ended |  |  | Year Ended |  |  | Year Ended |
|  | December 31, 2016 |  |  | January 2, 2016 |  |  | January 3, 2015 |
United States |  | $ | (2,656 | ) |  | $ | 291 |  |  | $ | 1,332 |
Foreign |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | (2,656 | ) |  | $ | 291 |  |  | $ | 1,332 |
The provision for (benefit from) income taxes includes:
|  | FY 2016 |  |  | FY 2015 |  |  | FY 2014 |
|  | Year Ended |  |  | Year Ended |  |  | Year Ended |
|  | December 31, 2016 |  |  | January 2, 2016 |  |  | January 3, 2015 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | (4 | ) |  | $ | 54 |
State |  |  | 4 |  |  |  | 30 |  |  |  | 16 |
|  |  | 4 |  |  |  | 26 |  |  |  | 70 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 9,271 |  |  |  | (12 | ) |  |  | (7,862 | )
State |  |  | (218 | ) |  |  | (197 | ) |  |  | (914 | )
|  |  | 9,053 |  |  |  | (209 | ) |  |  | (8,776 | )
Provision for (benefit from) income taxes |  | $ | 9,057 |  |  | $ | (183 | ) |  | $ | (8,706 | )
Our effective tax rate differs from the statutory federal income tax rate as shown in the following schedule:
|  | FY 2016 Year Ended December 31, 2016 |  |  | FY 2015 Year Ended January 2, 2016 |  |  | FY 2014 Year Ended January 3, 2015 |
Income tax provision at statutory rate |  |  | 34.0 | % |  |  | 34.0 | % |  |  | 34.0 | %
State income taxes, net of federal benefit |  |  | 9.6 | % |  |  | (70.8 | )% |  |  | (68.0 | )%
Permanent differences |  |  | (1.5 | )% |  |  | 12.0 | % |  |  | (1.1 | )%
Research and development credits |  |  | 3.0 | % |  |  | (34.8 | )% |  |  | (2.6 | )%
Change in valuation allowance |  |  | (387.4 | )% |  |  | — |  |  |  | (613.5 | )%
Other |  |  | 1.3 | % |  |  | (3.3 | )% |  |  | (2.4 | )%
Effective tax rate |  |  | (341.0 | )% |  |  | (62.9 | )% |  |  | (653.6 | )%
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 2016 December 31, 2016 |  |  | FY 2015 January 2, 2016 |
Net operating losses |  | $ | 4,411 |  |  | $ | 4,135 |
Research and development credits |  |  | 2,113 |  |  |  | 1,820 |
Accruals and reserves |  |  | 2,158 |  |  |  | 1,823 |
Deferred revenue |  |  | 104 |  |  |  | 120 |
Property and equipment |  |  | 396 |  |  |  | 399 |
Intangible assets |  |  | 783 |  |  |  | 792 |
Stock compensation |  |  | 972 |  |  |  | 613 |
Other tax credits |  |  | 90 |  |  |  | 89 |
Net deferred tax asset |  |  | 11,027 |  |  |  | 9,791 |
Valuation allowance |  |  | (11,095 | ) |  |  | (806 | )
Net deferred tax (liabilities) assets |  | $ | (68 | ) |  | $ | 8,985 |
Our accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of our 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. Our management forecasts taxable income by considering all available positive and negative evidence including our history of operating income or losses and our 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. As of December 31, 2016, based on the Company’s recent history of losses and its forecasted losses, management believes on a “more-likely-than-not” basis that a full valuation allowance is required. Accordingly, in the fourth quarter of fiscal year 2016, the Company provided a full valuation allowance on its federal and state deferred tax assets. As of December 31, 2016, the Company had federal and state net operating loss (“NOL”) carryforwards of $13.8 million and $15.3 million, respectively. Of the total NOL carryforwards, $3.0 million for federal and $2.5 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. In December 2015, Congress passed a tax extenders package, Protecting Americans from Tax Hikes (PATH) Act of 2015, and permanently extended the federal R&D credit. As of December 31, 2016, we had federal and state R&D credit carryforwards of approximately $1.6 million and $2.3 million, respectively, available to offset future tax liabilities. The federal credits will begin expiring in 2026 if not used. The state R&D credits do not expire. The above NOL and research and development credits are subject to Internal Revenue Code 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. We account 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. There is no accrued interest and penalty during the year ended December 31, 2016. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | FY 2016 Year Ended December 31, 2016 |  |  | FY 2015 Year Ended January 2, 2016 |  |  | FY 2014 Year Ended January 3, 2015 |
Balance at the beginning of the year |  | $ | 937 |  |  | $ | 861 |  |  | $ | 1,027 |
Additions based upon tax positions related to the current year |  |  | 75 |  |  |  | 73 |  |  |  | 53 |
Additions based upon tax positions related to the prior year |  |  | 17 |  |  |  | — |  |  |  | 51 |
Reductions based upon tax positions related to the prior year |  |  | - |  |  |  | 3 |  |  |  | (270 | )
Balance at the end of the year |  | $ | 1,029 |  |  | $ | 937 |  |  | $ | 861 |
Recognition of the unrecognized tax benefits of $1.0 million as of December 31, 2016 would affect our effective tax rate. We do not anticipate any material change in our 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.

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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 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 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 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=65882285&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=65882285&loc=d3e32537-109319 + Details
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