Annual report pursuant to Section 13 and 15(d)

Income Taxes

v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 30, 2012
Income Taxes

11. INCOME TAXES

The provision for federal income taxes for the years ended December 30, 2012, December 25, 2011 and December 26, 2010 consisted of the following:

 

     2012      2011      2010  

Current Income Tax Expense

         

Federal

    $ —          $ —          $ —      

State

      483         436         210   
  

 

 

     

 

 

     

 

 

  

Total Current income tax expense

      483         436         210   

Deferred income tax expense

         

Federal

      1,552         755         1,006   

State

      208         443         212   
  

 

 

     

 

 

     

 

 

  

Total deferred income tax expense

      1,760         1,198         1,218   
  

 

 

     

 

 

     

 

 

  

Total income tax expense

    $ 2,243       $ 1,634       $ 1,428   
  

 

 

     

 

 

     

 

 

  

Temporary difference between tax and financial reporting basis of assets and liabilities that give rise to the deferred income tax assets (liabilities) and their related tax effects at December 30, 2012 and December 25, 2011 are as follows:

 

     2012     2011  

Deferred tax assets:

     

Net operating loss carryforwards

    $ 5,800      $ 5,997   

Accrued liabilities

      773        417   

General business credits

      4,464        3,144   

Stock-based compensation

      551        443   

Other

      62        91   
  

 

 

    

 

 

  

Total deferred tax assets

      11,650        10,092   

Deferred tax liability:

     

Intangibles

      (6,058 )      (5,037 ) 

Prepaid expenses

      (298 )      (199 ) 

Property and equipment

      (9,213 )      (7,295 ) 

Other

      (542 )      (262 ) 
  

 

 

    

 

 

  

Total deferred tax liabilities

      (16,111 )      (12,793 ) 
  

 

 

    

 

 

  

Net deferred liabilities

    $ (4,461 )    $ (2,701 ) 
  

 

 

    

 

 

  

The Company’s net operating loss carry forward of $17,060 at December 30, 2012 will expire between 2028 and 2031. As of December 30, 2012, the Company has tax credits of $4,464 expiring in 2032. The following is a table showing the net operating loss by year of expiration:

 

Year Created

    Net Operating Loss      Year Expiring  

2008

    $ 3,696         2028   

2009

      2,883         2029   

2010

      3,144         2030   

2011

      7,337         2031   
  

 

 

     
   $ 17,060      
  

 

 

     

Deferred tax assets are reduced by a valuation allowance if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred taxes will not be realized. Both positive and negative evidence are considered in forming management’s judgment as to whether a valuation allowance is appropriate, and more weight is given to evidence that can be objectively verified. The tax benefits relating to any reversal of the valuation allowance on the deferred tax assets would be recognized as a reduction of future income tax expense. The Company believes that it will realize all of the deferred tax assets. Therefore, no valuation allowance has been recorded.

The effective income tax expense differs from the federal statutory tax expense for the fiscal years ended December 30, 2012, December 25, 2011 and December 26, 2010 as follows:

 

     Year Ended  
     December 30,
2012		     December 25,
2011		     December 26,
2010		  

Expected income tax expense

    $ 2,618      $ 1,733      $ 1,604   

State tax expense, net of federal benefit

      456        580        278   

Non-deductible compensation

      457        354        273   

FICA tip credit

      (1,342 )      (1,040 )      (706 ) 

Other

      54        7        (21 ) 
  

 

 

    

 

 

    

 

 

  

Income tax expense

    $ 2,243      $ 1,634      $ 1,428   
  

 

 

    

 

 

    

 

 

  

Federal tax standards require that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not (i.e. a likelihood of more than 50%) that the position would be sustained upon examination by tax authorities. A recognized tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The standards also require that changes in judgment that result in subsequent recognition, derecognition or change in a measurement of a tax position taken in a prior annual period (including any related interest and penalties) be recognized as a discrete item in the interim period in which the change occurs. As of December 30, 2012 and December 25, 2011, the Company recognized no liability for uncertain tax positions.

It is the Company’s policy to include any penalties and interest related to income taxes in its income tax provision. However, the Company currently has no penalties or interest related to income taxes. The Company is currently open to audit under the statute of limitations by the IRS for the years ended December 27, 2009 through December 30, 2012.