Note J - Income Taxes

9 Months Ended

Dec. 28, 2014

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE J – INCOME TAXES

The income tax provisions for the thirty-nine week periods ended December 28, 2014 and December 29, 2013 reflect effective tax rates of 40.9% and 39.3%, respectively, which have been reduced from statutory rates by 0.3% and 0.8%, respectively, for the differing effects of tax-exempt interest income. Nathan’s expects that its federal income tax rate will increase to 35% for the fiscal year ending March 29, 2015.

The amount of unrecognized tax benefits at December 28, 2014 was $315,000, all of which would impact Nathan’s effective tax rate, if recognized. As of December 28, 2014, Nathan’s had $362,000 of accrued interest and penalties in connection with unrecognized tax benefits.

During the fiscal year ending March 29, 2015, Nathan’s will seek to settle additional uncertain tax positions with the tax authorities. As a result, it is possible the amount of unrecognized tax benefits, excluding the related accrued interest and penalties, could be reduced by up to $64,000, which would favorably impact Nathan’s effective tax rate, although no assurances can be given in this regard.

Nathan’s estimates its annual tax rate for the fiscal year ending March 29, 2015 will be in the range of approximately 39.5% to 41.5%. The final annual tax rate is subject to many variables, including the effect of tax-exempt interest earned, among other factors, and therefore cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from our current estimates.