Note L - Income Taxes

9 Months Ended

Dec. 27, 2015

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE L – INCOME TAXES

The income tax provisions for the thirty-nine week periods ended December 27, 2015 and December 28, 2014 reflect effective tax rates of 41.0% and 40.9%, respectively, which have been reduced from statutory rates by 0.1% and 0.3%, respectively, for the differing effects of tax exempt interest income.

The amount of unrecognized tax benefits at December 27, 2015 was $287,000, all of which would impact Nathan’s effective tax rate, if recognized. As of December 27, 2015, Nathan’s had $309,000 of accrued interest and penalties in connection with unrecognized tax benefits.

During the fiscal year ending March 27, 2016, Nathan’s will seek to settle additional uncertain tax positions with the tax authorities. As a result, it is reasonably possible the amount of unrecognized tax benefits, excluding the related accrued interest and penalties, could be reduced by up to $98,000, which would favorably impact Nathan’s effective tax rate, although no assurances can be given in this regard.

Nathan’s estimates that its annual tax rate for the fiscal year ending March 27, 2016 will be in the range of approximately 40.5% to 41.9%, excluding the potential impact of any reduction to the Company’s unrecognized tax benefits. 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.

In June 2015, Nathan’s received notification from the New York State Department of Taxation and Finance that it will review Nathan’s tax returns for the period April 1, 2011 through March 31, 2014. Fieldwork has been completed and we are awaiting the final conclusion of the review.