Note 7 - Income Taxes

9 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(7) Income Taxes

Effective income tax rate. Our effective income tax rate was 23.9% for the nine-month period ended June 29, 2024, compared with 22.3% for the nine-month period ended July 1, 2023. The effective income tax rates for both periods were based upon the estimated rate applicable for the entire fiscal year adjusted to reflect any significant or discrete items related specifically to interim periods.

Deferred income taxes. As of June 29, 2024, and September 30, 2023, we recorded a deferred tax liability (net of valuation allowance) of $11.2 million and $7.5 million, respectively, in other liabilities on our consolidated balance sheets. We have $310,000 of state net operating loss carryforwards (“NOLs”) that expire between 2031 and 2038.

The realization of our deferred tax assets is entirely dependent upon our ability to generate future taxable income in applicable jurisdictions. GAAP requires that we periodically assess the need to establish a reserve against our deferred tax assets to the extent we no longer believe it is more likely than not that they will be fully realized. As of June 29, 2024, and September 30, 2023, we recorded a valuation allowance of $149,000 and $3,000, respectively, pertaining to various deferred tax assets that were not expected to be utilized. The valuation allowance is subject to periodic review and adjustment based on changes in facts and circumstances.

Uncertainty in income taxes. We establish contingency reserves for material, known tax exposures based on our assessment of the estimated liability that would be incurred in connection with the settlement of such matters. As of June 29, 2024, we had no material, known tax exposures that required the establishment of contingency reserves for uncertain tax positions.

We file U.S. federal, state and local income tax returns in various jurisdictions. Federal and various state tax returns filed after 2018 remain subject to examination.