Income Taxes:

12 Months Ended

Dec. 25, 2021

Income Taxes:

Income Taxes:

11.     Income Taxes:

A reconciliation of the expected federal income tax expense based on the federal statutory tax rate to the actual income tax expense is provided below:

	Year Ended
	December 25, 2021		December 26, 2020		December 28, 2019
Federal income tax expense at statutory rate (21%, 21%, 21%)	$	10,472,100	$	8,088,600	$	8,708,200
Change in valuation allowance		(1,914,400)		54,000		147,900
State and local income taxes, net of federal benefit		1,546,400		1,368,500		1,310,800
Permanent differences, including stock option expenses		(2,332,600)		(1,027,300)		(1,056,800)
Expiration of attributes		2,057,000		—		—
Adjustment to uncertain tax positions		163,400		85,100		(58,500)
Other, net		(44,500)		125,200		266,500
Actual income tax expense	$	9,947,400	$	8,694,100	$	9,318,100

Components of the provision for income taxes are as follows:

	Year Ended
	December 25, 2021		December 26, 2020		December 28, 2019
Current:
Federal	$	8,782,000	$	7,836,000	$	9,076,400
State		2,193,900		1,795,800		1,693,800
Foreign		333,500		286,000		363,200
Current provision		11,309,400		9,917,800		11,133,400
Deferred:
Federal		(1,435,000)		(1,202,100)		(1,834,800)
State		73,000		(21,600)		19,500
Deferred provision		(1,362,000)		(1,223,700)		(1,815,300)
Total provision for income taxes	$	9,947,400	$	8,694,100	$	9,318,100

The tax effects of temporary differences that give rise to the net deferred income tax assets and liabilities are presented below:

	December 25, 2021		December 26, 2020
Deferred tax assets:
Accounts receivable and lease reserves	$	15,500	$	66,600
Non-qualified stock option expense		1,405,400		1,581,900
Deferred revenue		1,663,500		1,885,400
Trademarks		32,600		36,100
Lease deposits		270,500		532,600
Loss from and impairment of equity and note investments		532,000		2,637,600
Foreign tax credits		376,200		185,000
Valuation allowance		(908,200)		(2,822,600)
Other		276,500		204,600
Total deferred tax assets		3,664,000		4,307,200
Deferred tax liabilities:
Lease revenue and initial direct costs		(362,200)		(2,330,700)
Depreciation and amortization		(49,100)		(85,800)
Total deferred tax liabilities		(411,300)		(2,416,500)
Total net deferred tax assets	$	3,252,700	$	1,890,700

The Company has assessed its taxable earnings history and prospective future taxable income. Based upon this assessment, the Company has determined that it is more likely than not that its deferred tax assets will be realized in future periods and no valuation allowance is necessary, except for the deferred tax assets related to the loss from and impairment of equity and note investments (which are capital losses for tax purposes) and the foreign tax credits. As a result, valuation allowances of $0.9 million and $2.8 million as of December 25, 2021 and December 26, 2020, respectively, have been recorded.

The amount of unrecognized tax benefits, including interest and penalties, as of December 25, 2021 and December 26, 2020, was $821,700 and $621,100, respectively, primarily for potential state taxes.

The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense for all periods presented. The Company had accrued approximately $144,500 and $111,000 for the payment of interest and penalties at December 25, 2021 and December 26, 2020, respectively.

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

	Total
Balance at December 28, 2019	$	499,000
Increases related to current year tax positions		144,500
Expiration of the statute of limitations for the assessment of taxes		(133,400)
Balance at December 26, 2020		510,100
Increases related to current year tax positions		190,000
Subtractions for tax positions of prior years		(22,900)
Balance at December 25, 2021	$	677,200

The Company and its subsidiaries file income tax returns in the U.S. federal, numerous state and certain foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2017. We expect various statutes of limitation to expire during the next 12 months. Due to the uncertain response of taxing authorities, a range of outcomes cannot be reasonably estimated at this time.