|12 Months Ended|
Dec. 25, 2016
|Income Tax Disclosure [Abstract]|
The provision for federal and state income taxes for the years ended December 25, 2016, December 27, 2015 and December 28, 2014 consisted of the following:
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 as of December 25, 2016 and December 27, 2015 are as follows:
We have approximately $9.2 million and $0.1 million of tax benefits ($3.3 million and $0.0 million net of tax, respectively) related to excess stock compensation which were recorded to additional paid-in-capital during the fiscal years ended December 25, 2016 and December 27, 2015, respectively. Under the "tax law ordering" method, as described in ASC 740, these amounts were also used as tax deductions and reduced taxable income for fiscal year ended December 25, 2016 and the amount of net operating loss carry forward utilized during fiscal year ended December 27, 2015. As of December 25, 2016, the Company has general business tax credits of $12.7 million expiring in 2035.
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 following is a reconciliation of the expected federal income taxes at the statutory rate of 35% for the fiscal years ended December 25, 2016 and December 27, 2015, and 34% for the fiscal year ended and December 28, 2014 to the actual provision for income taxes:
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 25, 2016 and December 27, 2015 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 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.
Reference 1: http://www.xbrl.org/2003/role/presentationRef