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INCOME TAXES | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | (12) INCOME TAXES For financial reporting purposes, loss before income taxes consists of the following components for the periods presented:
|  | Year Ended
(in thousands) |  | December 31, 2017 |  | January 1, 2017
United States |  | $ | (7,807) |  | $ | (6,699)
Foreign |  |  | 283 |  |  | 322
Total |  | $ | (7,524) |  | $ | (6,377)
The following table summarizes the income tax (expense) benefit for the periods presented:
|  | Year Ended
(in thousands) |  | December 31, 2017 |  | January 1, 2017
Current: |  |  |  |  |  |
Federal |  | $ | (418) |  | $ | 1,178
State |  |  | — |  |  | (85)
Foreign |  |  | (69) |  |  | (99)
|  |  | (487) |  |  | 994
Deferred: |  |  |  |  |  |
Federal |  |  | 1,228 |  |  | 889
State |  |  | 117 |  |  | 389
|  |  | 1,345 |  |  | 1,278
Total income tax benefit |  | $ | 858 |  | $ | 2,272
For financial reporting purposes, total income tax benefit (expense) includes the following components for the periods presented:
|  | Year Ended
(in thousands) |  | December 31, 2017 |  | January 1, 2017
Continuing operations |  | $ | 858 |  | $ | 2,272
Discontinued operations |  |  | 889 |  |  | (713)
Total income tax benefit |  | $ | 1,747 |  | $ | 1,559
The impact of uncertain tax positions taken or expected to be taken on income tax returns must be recognized in the financial statements at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained. The following is a reconciliation of the beginning and ending amounts of gross unrecognized tax benefit for the periods presented:
(in thousands) |  |  |
Balance at January 3, 2016 |  |  | 47
Increases attributable to tax positions taken during prior periods |  |  | 142
Audit settlements |  |  | (41)
Decreases due to lapses of statutes of limitations |  |  | (33)
Balance at January 1, 2017 |  |  | 115
Audit settlements |  |  | (89)
Decreases due to lapses of statutes of limitations |  |  | (13)
Balance at December 31, 2017 |  | $ | 13
We recognized interest and penalties of approximately ($22,000) and $20,000, respectively during the years ended December 31, 2017 and January 1, 2017. Substantially all of our unrecognized tax benefits, if recognized, would impact our effective tax rate. As of December 31, 2017 and January 1, 2017, we had recorded a liability of approximately $2,000 and $25,000, respectively related to accrued interest and penalties. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The preparation of these income tax returns requires us to interpret and apply relevant federal and state income tax laws. It is common for federal and state taxing authorities to periodically examine filed tax returns. During these examinations, it is possible for taxing authorities to interpret facts or tax law differently than we do. As a result, we may be required to adjust tax liabilities affecting our effective tax rate. Tax years 2014 and forward remain subject to federal examination. Tax years 2013 and forward remain subject to state examination. It is possible that the liability associated with the unrecognized tax benefits will increase or decrease within the next 12 months. The expiration of statutes of limitations would decrease our unrecognized tax benefits by approximately $14,000. We have significant net deferred tax assets (“DTA”), which results from the net temporary timing differences between amounts recorded within our consolidated financial statements in accordance with GAAP and such amounts measured in accordance with the laws of various taxing jurisdictions and as reported in our tax returns. A DTA generally represents future tax benefits to be received when temporary differences previously reported in our consolidated financial statements become deductible for income tax purposes, when net operating loss carry forwards are applied against future taxable income, or when tax credit carry forwards are utilized on our tax returns. As of December 31, 2017, the majority of our DTA resulted from net operating loss and tax credit carryforwards, which will not be realized unless we generate taxable income in the future. We evaluate our net deferred tax asset on a quarterly basis to determine whether current facts and circumstances indicate that the DTA may not be fully realizable and we provide for valuation allowances on those portions of the DTA that we don’t expect to realize. Significant judgment is required in determining the realizability of our DTA. The assessment of whether valuation allowances are required considers, among other matters, the nature, frequency and severity of any current and cumulative losses, forecasts of future profitability, the duration of statutory carry forward periods, our experience with loss carry forwards not expiring unused and tax planning alternatives. In analyzing the need for valuation allowances, we first considered our history of cumulative operating results for income tax purposes over the past three years in each of the tax jurisdictions in which we operate, our financial performance in recent quarters, statutory carry forward periods and tax planning alternatives. Finally, we considered both our near and long-term financial outlook. After considering all available evidence both positive and negative, we concluded that recognition of valuation allowances for substantially all of our DTA was not required. The following is a summary of the components of our net deferred tax assets as of the periods presented:
(in thousands) |  | December 31, 2017 |  | January 1, 2017
Deferred tax asset: |  |  |  |  |  |
Deferred rent |  | $ | 567 |  | $ | 3,184
Federal net operating loss carry-forwards |  |  | 2,486 |  |  | —
State net operating loss carry-forwards |  |  | 3,573 |  |  | 2,325
Intangible property basis difference |  |  | 138 |  |  | —
Financing lease obligation |  |  | 393 |  |  | 1,028
Tax credit carryover |  |  | 1,761 |  |  | 910
Accrued expenses |  |  | 74 |  |  | 585
Stock-based compensation |  |  | 141 |  |  | 472
Deferred revenue |  |  | 257 |  |  | 452
Lease reserve |  |  | 449 |  |  | 222
Accrued and deferred compensation |  |  | 38 |  |  | 67
Contribution carryover |  |  | 36 |  |  | 18
Inventories |  |  | 5 |  |  | 9
Total deferred tax asset |  | $ | 9,918 |  | $ | 9,272
Deferred tax liability: |  |  |  |  |  |
Property and equipment basis difference |  | $ | (1,060) |  | $ | (1,671)
Inventories |  |  | (60) |  |  | (295)
Prepaid expenses |  |  | (139) |  |  | (269)
Intangible property basis difference |  |  | — |  |  | (56)
Total deferred tax liability |  | $ | (1,259) |  | $ | (2,291)
Net deferred tax assets |  |  | 8,659 |  |  | 6,981
Valuation allowance |  |  | (2,836) |  |  | (2,348)
Deferred tax asset |  | $ | 5,823 |  | $ | 4,633
During the year ended December 31, 2017, the net change in our DTA valuation allowance was approximately $488,000. As of December 31, 2017, we had cumulative state net operating loss carry-forwards for tax reporting purposes of approximately $53.9 million and federal net operating loss carry-forwards for tax reporting purposes of $11.8 million which, if not used, will begin to expire in fiscal 2018 and 2037, respectively. The following is a reconciliation from our statutory tax rate to our effective tax rate for the periods presented:
|  | Year Ended |
|  | December 31, 2017 |  | January 1, 2017 |
Federal statutory tax rate |  | 34.0 | % | 34.0 | %
State taxes, net of valuation allowance and federal benefit |  | 2.4 |  | 4.0 |
Federal rate change and impact on state benefit |  | (24.1) |  | — |
Foreign taxes |  | (0.9) |  | (1.6) |
Tax effect of permanent differences |  | (2.0) |  | (4.5) |
Tax effect of general business credits |  | 3.7 |  | 5.0 |
Tax effect of foreign tax credit |  | 0.9 |  | 1.6 |
Uncertain tax positions |  | 1.7 |  | (2.1) |
Stock-based compensation |  | (4.4) |  | — |
Other |  | 0.2 |  | (0.8) |
Effective tax rate |  | 11.5 | % | 35.6 | %
The substantial reduction in our future effective tax rate was primarily a result of recently signed into law Tax Cuts and Jobs Act (the “New Tax Law”), which will reduce our statutory tax rate from 34.0% to 21.0%. This decrease in future tax rate resulted in our recognition of approximately $1.8 million in deferred tax expense due to the revaluation of our DTA. Staff Accounting Bulletin 118 outlines the approach that companies may take if essential information related to the New Tax Law is not available in reasonable detail by the time the financial statements are filed. We believe that we have reflected all of the material impacts of the New Tax Law in our consolidated financial statements as of December 31, 2017 and that there are no open items; however, our estimates will be finalized throughout fiscal 2018 as we complete our income tax returns for the fiscal year ended December 31, 2017.

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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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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