NOTE J - INCOME TAXES

The income tax provision consists of the following for the fiscal years ended

March 26, 2017,

March 27, 2016

and

March 29, 2015:

	March 26, 2017		March 27, 2016			March 29, 2015
Federal
Current	$	3,024	$	3,176		$	5,992
Deferred		79		(11	)		60
Total Federal income tax		3,103		3,165			6,052
State and local
Current		1,195		1,135			1,599
Deferred		21		(12	)		51
Total State and local income tax		1,216		1,123			1,650
Total provision for income taxes	$	4,319	$	4,288		$	7,702

The total income tax provision for the fiscal years ended

March 26, 2017,

March 27, 2016

and

March 29, 2015

differs from the amounts computed by applying the United States Federal income tax rate of

34%,

34%

and

35%,

respectively to income before income taxes as a result of the following:

	March 26 , 201 7			March 27, 2016			March 29, 2015

Computed “expected” tax expense	$	4,013		$	3,531		$	6,792
State and local income taxes, net of Federal income tax benefit		797			826			1,112
Tax-exempt investment earnings		-			(9	)		(63	)
Change in uncertain tax positions, net		(11	)		(129	)		(62	)
Nondeductible meals and entertainment and other		61			69			(77	)
Nondeductible compensation		118			-			-
Tax benefit share based payments		(659	)		-			-
Total provision for income taxes	$	4,319		$	4,288		$	7,702

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

	March 26 ,			March 27,
	201 7			2016
Deferred tax assets
Accrued expenses	$	361		$	236
Allowance for doubtful accounts		59			62
Deferred revenue		347			393
Deferred stock compensation		224			271
Excess of straight line over actual rent		338			379
Investment		187			151
Other		104			119
Total gross deferred tax assets	$	1,620		$	1,611

Deferred tax liabilities
Deductible prepaid expense		288			263
Depreciation expense		1,771			1,717
Amortization		374			344
Total gross deferred tax liabilities		2,433			2,324
Net deferred tax (liability)	$	(813	)	$	(713	)

A valuation allowance is provided when it is more likely than

not

that some portion, or all, of the deferred tax assets will

not

be realized. We consider the level of historical taxable income, scheduled reversal of temporary differences, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted. Based upon these considerations, management believes that it is more likely than

not

that the Company will realize the benefit of its gross deferred tax asset.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, for the fiscal years ended

March 26, 2017,

March 27, 2016

and

March 29, 2015.

	March 26, 2017			March 27, 2016			March 29, 2015

Unrecognized tax benefits, beginning of year	$	208		$	266		$	283
Decreases of tax positions taken in prior years		(31	)		(98	)		(64	)
Increases based on tax positions taken in current year		41			43			47
Settlements of tax positions taken in prior years		(51	)		(3	)		-
Unrecognized tax benefits, end of year	$	167		$	208		$	266

The amount of unrecognized tax benefits at

March 26, 2017,

March 27, 2016

and

March 29, 2015

were

$167

$208

and

$266,

respectively, all of which would impact Nathan’s effective tax rate, if recognized. As of

March 26, 2017

and

March 27, 2016,

the Company had

$183

and

$200,

respectively, accrued for the payment of interest and penalties. For the fiscal years ended

March 26, 2017,

March 27, 2016

and

March 29, 2015

Nathan’s recognized interest and penalties in the amounts of

$29,

$34

and

$44,

respectively. The Company believes that it is reasonably possible that decreases in unrecognized tax benefits of up to

may

be recorded within the next year.

June 2016,

Nathan’s received notification from the Internal Revenue Service that it was seeking to review Nathan’s federal tax return for the period

April 1, 2014

through

March 31, 2015.

The income tax examination has been completed with

changes to the original return as filed.

May 2014,

Nathan’s received notification from the Internal Revenue Service that it is seeking to review its tax return for the year ended

March 31, 2013.

The income tax examination has been completed with

changes to the original return as filed.

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.

The income tax examination has been completed with

changes to the original return as filed.

The earliest tax years’ that are subject to examination by taxing authorities by major jurisdictions are as follows:

Jurisdiction	Fiscal Year
Federal	2014
New York State	2014
New York City	2014
New Jersey	2013
Pennsylvania	2014