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Note 7 - Income Taxes | 12 Months Ended
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Sep. 26, 2023
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
7. | Income Taxes
Deferred tax assets (liabilities) are comprised of the following at the period end (in thousands):
|  | September 26, 2023 Long Term |  |  | September 27, 2022 Long Term |
Deferred income tax assets (liabilities): |  |  |  |  |  |  |  |
Tax effect of net operating loss carry-forward |  | $ | 3,622 |  |  | $ | 3,942 |
General business credits |  |  | 6,262 |  |  |  | 5,225 |
Deferred revenue |  |  | 29 |  |  |  | 50 |
Intangibles basis differences |  |  | 925 |  |  |  | 398 |
Long-term lease liability |  |  | 10,613 |  |  |  | 11,113 |
Other future benefits |  |  | 668 |  |  |  | 666 |
Deferred tax assets |  |  | 22,119 |  |  |  | 21,394 |
Less valuation allowance |  |  | - |  |  |  | (10,535 | )
Deferred tax assets, net of valuation allowance |  |  | 22,119 |  |  |  | 10,859 |
Partnership/joint venture basis differences |  |  | (64 | ) |  |  | (30 | )
Property and Equipment basis differences |  |  | (1,731 | ) |  |  | (1,424 | )
ROU asset |  |  | (8,741 | ) |  |  | (9,225 | )
Other future expense |  |  | - |  |  |  | (180 | )
Deferred tax liabilities |  |  | (10,536 | ) |  |  | (10,859 | )
Net deferred tax assets (liabilities) |  | $ | 11,583 |  |  | $ | - |
The Company has Federal net operating loss carry-forwards available for future periods, as discussed below, of approximately $11,840,000 from 2019, $496,000 from 2018, and $1,397,000 from 2017 and prior for income tax purposes. The net operating loss carry-forwards from periods prior to 2019 expire between 2029 and 2038. Based on the changes in control, which occurred in 2011, 2013, and 2017, the utilization of the loss carry-forwards incurred for periods prior to 2017 is limited to approximately $727,000 per year. The Company has general business tax credits of approximately $6,262,000 from 2014 through 2023 which expire from 2034 through 2042. As of September 26, 2023, our deferred tax assets were primarily the result of NOLs and tax credit carryforwards. A valuation allowance of $0 and $10,535,000 were recorded against our gross deferred tax asset balance as of September 26, 2023 and September 27, 2022, respectively. For the year ended September 26, 2023 we recorded a net valuation release of $10,535,000 on the basis of management’s reassessment of the amount of its deferred tax assets that are more likely than not to be realized. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of September 26, 2023, management determined that there is sufficient positive evidence, including recent cumulative pretax income and the purchase of the non-controlling interests in several joint interests that generate significant income. Based on the review of this evidence, management determined that there is sufficient positive evidence to conclude that it is more likely than not deferred taxes assets are realizable and therefore released the full valuation allowance during the year. The total amount of deferred tax benefit recorded to additional paid-in capital as a result of the purchase of the non-controlling interests during the year ended September 26, 2023 was $792,000. The following table summarizes the components of the provision for income taxes (in thousands):
|  | Fiscal 2023 |  |  | Fiscal 2022 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |
State |  |  | 4 |  |  |  | (5 | )
|  |  | 4 |  |  |  | (5 | )
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | (9,925 | ) |  |  | - |
State |  |  | (866 | ) |  |  | - |
|  |  | (10,791 | ) |  |  | - |
Total income tax (benefit) expense |  | $ | (10,787 | ) |  | $ | (5 | )
Total income tax expense for the years ended September 26, 2023 and September 27, 2022 differed from the amounts computed by applying the U.S. Federal statutory tax rate to pre-tax income as follows (in thousands):
|  | Fiscal 2023 |  |  | Fiscal 2022 |
Total expense (benefit) computed by applying statutory federal rate |  | $ | 182 |  |  | $ | (556 | )
State income tax, net of federal tax benefit |  |  | 344 |  |  |  | (56 | )
FICA/WOTC tax credits |  |  | (989 | ) |  |  | (694 | )
Effect of change in tax law |  |  | - |  |  |  | - |
Effect of change in valuation allowance |  |  | (10,535 | ) |  |  | 1,164 |
Permanent differences |  |  | 383 |  |  |  | 60 |
Other |  |  | (172 | ) |  |  | 87 |
Provision for income taxes |  | $ | (10,787 | ) |  | $ | (5 | )

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