Note 14 - Income Taxes

9 Months Ended

Jun. 27, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 14. Income Taxes

We account for income taxes using the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. Deferred tax assets are reviewed periodically for realizability and valuation allowances are adjusted as necessary.

The Company’s effective income tax rate for the three months ended June 27, 2023 was (189.98%), a decrease from an effective income tax rate of (0.21%) for the three months ended June 28, 2022. The decrease is due to the release of the Company’s valuation allowance during the second quarter that has been adjusted during the third quarter as a result of a change in the Company’s forecast for the year.  The Company’s effective income tax rate for the three quarters ended June 27, 2023 was (1,261.02%), a decrease from an effective income tax rate of (0.7%) for the three quarters ended June 28, 2022. The decrease is also attributed to the release of the Company’s valuation allowance and the forecast adjustments that occurred during the second and third quarters, respectively.

During the second quarter of this fiscal year, the Company entered into a transaction in which it purchased the non-controlling interests in several joint ventures that have historically collectively generated significant income. Due to this transaction and a recent history of cumulative earnings, management believes the Company is now in a position to realize its tax benefits beginning in the current year, as well as in future years, and as such, has released the full valuation allowance recorded.

The Company is subject to taxation in various jurisdictions within the U.S. The Company continues to remain subject to examination by U.S. federal authorities for the years 2020 through 2023. The Company believes that its income tax filing positions and deductions will be sustained upon audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain income tax positions have been recorded. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. No accrual for interest and penalties was considered necessary as of June 27, 2023.