Income Taxes

12 Months Ended

Dec. 29, 2012

Income Tax Disclosure [Abstract]

Income Taxes

(8) Income Taxes

Components of income tax expense (benefit) for each year are as follows:

	2012			2011			2010
Current
United States:
Federal		—		$	95,217		$	45,292
State		456			(37,445	)		43,264
Current income tax provision:		456			57,772			88,556
Deferred:
United States:
Federal		(1,165,700	)		(274,962	)		247,563
State		(140,456	)		(105,576	)		(25,146	)
Deferred income tax provision (benefit), net		(1,306,156	)		(380,538	)		222,417
Total	$	(1,305,700	)	$	(322,766	)	$	310,973

Deferred tax assets as of December 29, 2012 and December 31, 2011 are as follows:

	December 29, 2012		December 31, 2011
Deferred Tax Assets:
Net operating loss
carryforwards	$	1,227,000	$	465,000
Stock compensation		250,000		168,000
Credit carryforwards		665,000		395,000
Inventory		328,000		256,000
Accrued liabilities		23,000		27,000
Depreciation		289,000		165,000
Other		5,000		5,000
Gross deferred tax assets		2,787,000		1,481,000
Valuation allowance		—		—
Net deferred tax assets	$	2,787,000	$	1,481,000

At December 29, 2012 and December 31, 2011, the Company had net operating loss carryforwards of approximately $3,303,000 and $1,368,000 respectively available to offset future income for U.S. Federal income tax purposes. These operating loss carryforwards expire in various amounts from 2020 through 2032 as follows:

2020	$	77,000
2021		363,000
2022		887,000
2031		63,000
2032		1,913,000
	$	3,303,000

During 2010, the Company used approximately $1,142,000 of net operating loss carryforwards.

A valuation allowance is required to be established or maintained when it is "more likely than not" that all or a portion of deferred tax assets will not be realized. The Company believes that it will generate sufficient future taxable income to realize the tax benefits related to the remaining deferred tax assets.

A summary of the change in the deferred tax asset is as follows:

		2012		2011		2010
Balance at beginning of year	$	1,480,817	$	1,100,279	$	1,322,696
Deferred tax (expense) benefit		1,306,156		380,538		(222,417)
Balance at end of year	$	2,786,973	$	1,480,817	$	1,100,279

Income tax (benefit) expense is different from the amounts computed by applying the U.S. federal statutory income tax rate of 34 percent to pretax income as a result of the following:

		2012		2011		2010
Tax at statutory rate	$	(961,000)	$	(125,000)	$	347,000
State tax, net
of federal benefit		(140,000)		(94,000)		46,000
Net operating
loss and credit carryforwards		(218,000)		(95,000)		(8,000)
Other		13,000		(9,000)		(74,000)
Total	$	(1,306,000)	$	(323,000)	$	311,000

Certain provisions of the Internal Revenue Code limit the annual utilization of net operating loss carryforwards if a change in ownership occurs, as defined. The Company believes that it did not have an ownership change through the period ended December 29, 2012. Therefore, as of year-end 2012 all net operating loss carryforwards should be available to offset future taxable income, assuming there will be no ownership change as defined. The Company’s income tax filings are subject to review and examination by federal and state taxing authorities. The Company is currently open to audit under the applicable statutes of limitations for the years 2009 through 2012.