INCOME TAXES

12 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

12. INCOME TAXES

The provision for income taxes consists of the following:

	Year Ended
	September 30, 2017			October 1, 2016
	(In thousands)
Current provision (benefit):
Federal	$	(144	)	$	778
State and local		287			192
		143			970
Deferred provision (benefit):
Federal		1,391			915
State and local		134			213
		1,525			1,128
	$	1,668		$	2,098

The effective tax rate differs from the U.S. income tax rate as follows:

	Year Ended
	September 30, 2017			October 1, 2016
	(In thousands)
Provision at Federal statutory rate (34% in 2017 and 2016)	$	2,185		$	2,580
State and local income taxes, net of tax benefits		255			326
Tax credits		(632	)		(611	)
Income attributable to non-controlling interest		(244	)		(501	)
Changes in tax rates		8			9
Other		96			295
	$	1,668		$	2,098

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	September 30, 2017			October 1, 2016
	(In thousands)
Long-term deferred tax assets (liabilities):
State net operating loss carryforwards	$	3,210		$	3,179
Operating lease deferred credits		826			772
Depreciation and amortization		(2,160	)		(256	)
Deferred compensation		580			986
Partnership investments		(291	)		(709	)
Prepaid expenses		(419	)		(444	)
Other		99			230
Total long-term deferred tax assets		1,845			3,758
Valuation allowance		(354	)		(342	)
Total net deferred tax assets	$	1,491		$	3,416

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. In the assessment of the valuation allowance, appropriate consideration was given to all positive and negative evidence including recent operating profitability, forecasts of future earnings and the duration of statutory carryforward periods. The Company recorded a valuation allowance of $354,000 and $342,000 as of September 30, 2017 and October 1, 2016, respectively, attributable to state and local net operating loss carryforwards which are not realizable on a more-likely-than-not basis. During fiscal 2017, the Company’s valuation allowance increased by approximately $12,000 as the Company determined that certain state net operating losses became unrealizable on a more-likely-than-not basis.

As of September 30, 2017, the Company has New York State net operating losses of approximately $20,030,000 and New York City net operating loss carryforwards of approximately $18,455,000 that expire through fiscal 2037.

During fiscal 2017, certain equity compensation awards expired unexercised. As such, the Company reversed the related deferred tax asset in the amount of approximately $400,000 as a charge to Additional Paid-in Capital as there was a sufficient pool of windfall tax benefit available. During fiscal 2016, the Company recorded a credit to Additional Paid-in Capital of $11,000 related to equity compensation.

A reconciliation of the beginning and ending amount of unrecognized tax benefits excluding interest and penalties is as follows:

	September 30,			October 1,
	2017			2016
	(In thousands)
Balance at beginning of year	$	366		$	307
Additions based on tax positions taken in current and prior years		15			105
Settlements		(134	)		(46	)
Decreases based on tax postions taken in prior years		(96	)		—
Balance at end of year	$	151		$	366

The entire amount of unrecognized tax benefits if recognized would reduce our annual effective tax rate. As of September 30, 2017, the Company accrued approximately $127,000 of interest and penalties. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. Inherent uncertainties exist in estimates of tax contingencies due to changes in tax law, both legislated and concluded through the various jurisdictions’ tax court systems.

The Company files tax returns in the U.S. and various state and local jurisdictions with varying statutes of limitations. The 2014 through 2017 fiscal years remain subject to examination by the Internal Revenue Service most state and local tax authorities.