Income Taxes

12 Months Ended

Dec. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 17: Income taxes

For fiscal years ended December 30, 2023, and December 31, 2022, the Company recorded an income tax benefit from continuing operations of approximately $429,000 and an income tax benefit of $6.6 million, respectively, and an income tax provision from discontinued operations of approximately $971,000 and $2.1 million, respectively, which consisted of the following (in $000’s):

	Fiscal Years Ended
	December 30, 2023		December 31, 2022
Current tax expense:
State	$	—	$	32
Federal	97		45
Current tax expense	97		77
Deferred tax provision (benefit) - domestic	445		(4,589)
Total provision (benefit) of income taxes	$	542	$	(4,512)

A reconciliation of the Company's income tax benefit (provision) with the federal statutory tax rate for the fiscal years ended December 30, 2023, and December 31, 2022, respectively, is shown below:

	Fiscal Years Ended
	December 30, 2023		December 31, 2022
U.S. statutory rate	21.0	%	21.0	%
Federal income tax for installment sale	—	%	0.6	%
State tax rate	1.5	%	5.5	%
Foreign rate differential	0.5	%	-0.2	%
Permanent differences	-0.1	%	0.4	%
Change in tax rates	—	%	2.8	%
Impact of sale of ARCA Recycling and Canada	-4.4	%	—	%
Change in valuation allowance	-25.7	%	-96.4	%
Other	-0.1	%	0.4	%
	-7.3	%	-65.9	%

Income (loss) before provision of income taxes was derived from the following sources for fiscal years December 30, 2023 and December 31, 2022, respectively, as shown below (in $000’s):

	Fiscal Years Ended
	December 30, 2023		December 31, 2022
United States	$	(6,613)	$	6,717
Canada	(657)		(237)
Total	$	(7,270)	$	6,480

The components of net deferred tax assets (liabilities) as of December 30, 2023 and December 31, 2022, respectively, are as follows (in $000’s):

	December 30, 2023		December 31, 2022
Deferred tax assets (liabilities):
Accrued expenses	7		1,723
Accrued compensation	3		82
Section 174 expenses	61		92
Prepaid expenses	(16)		(184)
Net operating loss	5,360		5,494
Lease liability	—		39
Tax credits	3		3
Share-based compensation	136		171
Intangibles	(3,747)		(4,782)
Property and equipment	—		(483)
Installment sale	—		(2,114)
Unrealized losses	327		305
Section 163(j) interest	—		363
	2,134		709
Less: valuation allowance	(2,773)		(904)
Net deferred tax assets (liabilities)	$	(639)	$	(195)

As of December 30, 2023, the Company has net operating loss carryforwards of approximately $20.9 million for federal income tax purposes, and approximately $14.8 million for state income tax purposes, which will be available to offset future taxable income. Due to recent tax legislation, the federal net operating losses are eligible for indefinite carryforward, limited by certain taxable income limitations. State net operating losses begin to expire in 2029. The Company evaluates all available evidence to determine if a valuation allowance is needed to reduce its deferred tax assets. During the fourth quarter of fiscal year 2023, management concluded that a valuation allowance is necessary for the state net operating loss carryforward and a portion of the federal net operating loss carryforward. Due to the 2023 sale of ARCA Canada (as part of the Recycling Subsidiaries transaction), the valuation allowance was released. The Company has recorded a valuation allowance of approximately $2.8 million and $904,000 as of December 30, 2023, and December 31, 2022, respectfully.

The Company annually conducts an analysis of its uncertain tax positions and has concluded that it has no uncertain tax positions as of December 30, 2023. The Company’s policy is to record uncertain tax positions as a component of income tax expense.

The Company files U.S. and state income tax returns in jurisdictions with differing statutes of limitations. The 2020 through 2023 tax years remain subject to selection for examination as of December 30, 2023. None of the Company’s income tax returns are currently under audit.