Note J - Income Taxes

6 Months Ended

Sep. 24, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

J – INCOME TAXES

The income tax provisions for the t

wenty-

six

week periods ended

September 24, 2017

and

September 25, 2016

reflect effective tax rates of

39.4%

and

36.9%,

respectively. Nathan’s effective tax rates for the

twenty-six

week periods ended

September 24, 2017

and

September 25, 2016

were reduced by

1.9%

and

6.4%,

respectively, as a result of the tax benefits associated with stock compensation. For the

twenty-six

week periods ended

September 24, 2017

and

September 25, 2016,

excess tax benefits of

$194,000

and

$621,000,

respectively, were reflected in the Consolidated Statements of Earnings as a reduction to the provision for income taxes.

The amount of unrecognized tax benefits at

September 24, 2017

was

$201,000,

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

September 24, 2017,

Nathan’s had

$208,000

of accrued interest and penalties in connection with unrecognized tax benefits.

During the fiscal year ending

March 25, 2018,

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

$5,000,

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 25, 2018

will be in the range of approximately

40.8%

to

42.3%,

excluding the impact of the excess tax benefit associated with stock compensation and 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 ultimate determination of revenue and income tax by state, 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.