Note 13. Income Taxes

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Text Block]

13.  Income Taxes

The income tax benefit for the nine months ended September 30, 2012 and October 2, 2011 was $2.2 million and $0.5 million, respectively. Lakes’ income tax benefit in the current year period is primarily due to its ability to carry back estimated 2012 taxable loss to a prior year and receive a refund of taxes previously paid.  In the prior period, the income tax benefit was primarily due to 2011 timing differences and related valuation allowances.  The Company’s effective tax rates were (227)% and (5)% for the nine months ended September 30, 2012 and October 2, 2011, respectively. For the nine months ended September 30, 2012, the effective tax rate differs from the federal tax rate of 35% primarily due to state taxes and discrete items recognized.  For the nine months ended October 2, 2011, the effective tax rate differs from the federal tax rate of 35% primarily due to state taxes and changes in valuation allowance due to 2011 timing differences.

Lakes has recorded income taxes receivable of $5.5 million and $3.5 million for the periods ended September 30, 2012 and January 1, 2012, respectively, related to the Company’s ability to carry back taxable losses to a prior year and receive a refund of taxes previously paid.

Deferred tax assets are evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies.  Management has evaluated all available evidence and has determined that negative evidence continues to outweigh positive evidence for the realization of deferred tax assets and as a result continues to provide a full valuation allowance against its deferred tax assets.