Income Taxes

12 Months Ended

Sep. 24, 2019

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes:

Deferred tax assets (liabilities) are comprised of the following at the period end:

	2019 Long Term			2018 Long Term
Deferred income tax assets (liabilities):
Tax effect of net operating loss carry-forward		4,631			3,605
General business credits		3,065			2,264
Partnership/joint venture basis differences		(58	)		(63	)
Deferred revenue		89			111
Property and Equipment basis differences		(1,315	)		(1,444	)
Intangibles basis differences		(1,107	)		(803	)
Other accrued liability and asset difference		1,335			1,183
Deferred tax assets		6,640			4,853
Less valuation allowance		(6,640	)		(4,853	)
Net deferred tax asset (liabilities)	$	-		$	-

The Company has net operating loss carry-forwards available for future periods, as discussed below, of approximately $3,694,000 from 2019, $4,538,000 from 2018, and $10,229,000 from 2017 and prior for income tax purposes. The net operating loss carry-forwards from periods prior to 2019 expire between 2025 and 2038. Based on the change in control, which occurred in 2011, the utilization of the loss carry-forwards incurred for periods prior to 2012 is limited to approximately $160,000 per year. The Company has general business tax credits of $3,065,000 from 2015 through 2019 which expire from 2034 through 2039.

The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. The Company assessed whether a valuation allowance should be recorded against its deferred tax assets based on consideration of all available evidence using a "more likely than not" standard. In assessing the need for a valuation allowance, the company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered in determining the amount of the recorded valuation allowance. Based on the Company's review of this evidence, management determined that a full valuation allowance against all of the Company's deferred tax assets was appropriate.

The following table summarizes the components of the provision for income taxes (in thousands):

		2019		2018
Current income tax benefit (expense)	$	-	$	-
Deferred income tax benefit (expense)		-		-
Total income tax benefit (expense)	$	-	$	-

Total income tax expense for the years ended September 24, 2019 and September 25, 2018 differed from the amounts computed by applying the U.S. Federal statutory tax rate to pre-tax income as follows:

	2019			2018
Total benefit computed by applying statutory federal rate	$	(1,079	)	$	(299	)
State income tax, net of federal tax benefit		(153	)		(41	)
FICA/WOTC tax credits		(702	)		(612	)
Tax Reform Impact		-			1,305
Effect of change in valuation allowance		1,787			(565	)
Permanent differences		87			78
Other		60			134
Provision for income taxes	$	-		$	-

On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was signed into law, significantly impacting several sections of the Internal Revenue Code. The enactment date occurred prior to the end of the second quarter of fiscal 2018 and therefore the federal statutory tax rate changes stipulated by the TCJA were reflected in the second quarter. Effective January 1, 2018, the U.S. corporate federal statutory income tax rate was reduced from 35% to 21%. The Company’s statutory federal income tax rate is 28.1% for fiscal year 2018 representing a blended tax rate for the current fiscal year based on the number of days in the fiscal year before and after the effective date. For the fiscal year ended September 26, 2017, the Company’s statutory federal tax rate was 35.0% and will be 21.0% for fiscal year 2019 and thereafter.

The Company remeasured its existing deferred tax assets and liabilities at the rate the Company expected to be in effect when those deferred taxes would be realized. The Company has assessed a full valuation allowance against the deferred taxes, and therefore applied the 21% tax rate applicable to fiscal years 2019 and beyond. The impact of this remeasurement was tax expense of $1.3 million, exclusive of the assessment of a valuation allowance.

In December 2017, the Securities and Exchange Commission provided guidance allowing registrants to record provisional amounts, during a specified measurement period, when the necessary information is not available, prepared, or analyzed in reasonable detail to account for the impact of the TCJA. Due to the continued determination that a full valuation allowance was appropriate to the Company’s deferred tax assets and liabilities, these changes were offset by equal and offsetting change in the valuation allowance. As of September 24, 2019, we have completed our analysis of the revaluation of our deferred tax assets and liabilities, the discrete impact of such as identified above. We continue to assess the impacts of the TCJA on future fiscal years and monitor the Internal Revenue Service guidance intended to interpret the most complex provisions of the TCJA.