Income Taxes |
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| Income Taxes |
Note 7 – Income Taxes The components of loss before income taxes consist of the following:
The income tax provision consists of the following:
Income tax provision differs from the amount that would result from applying the federal statutory rate as follows:
For fiscal years 2024 and 2023, the effective tax rate for the Company was (0.7)%, (1.8)%, respectively. The Company’s effective tax rate for fiscal years 2024 and 2023 differs from the U.S. federal rate primarily as a result of non-deductible share-based compensation and the change in the valuation allowance maintained against the Company’s deferred tax assets. Deferred tax assets and deferred tax liabilities consisted of the following:
As of December 28, 2024, federal and state net operating loss (“NOL”) carryforwards were $127,019 and $93,822, respectively. Federal NOL carryforwards of $891 were acquired in the acquisition of WAG which are subject to Internal Revenue Code section 382 and limited to an annual usage limitation of $135. Federal NOL carryforwards begin to expire in 2029, while state NOL carryforwards also begin to expire in 2029. The state NOL carryforwards expire in the respective tax years as follows:
Under the provisions of ASC 740, management is required to evaluate whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and reversal of existing taxable temporary differences. ASC 740 provides that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years or losses expected in early future years. As of December 28, 2024, mainly due to cumulative losses in recent years, the Company maintained a valuation allowance in the amount of $45,463 against deferred tax assets that were not more likely than not of being realized. We are subject to U.S. federal income tax as well as income tax of foreign and state tax jurisdictions. The tax years 2020-2024 remain open to examination by the major taxing jurisdictions to which the Company is subject, except the Internal Revenue Service for which the tax years 2021-2024 remain open. The Company does not anticipate a significant change to the amount of unrecognized tax benefits within the next twelve months. Included in accrued expenses are income taxes receivable of ($284) and ($267) as of December 28, 2024 and December 30, 2023, respectively, consisting primarily of current state taxes. Included in other non-current liabilities are income taxes payable of $1,227 and $1,124 as of December 28, 2024 and December 30, 2023, respectively, relating to accrued future foreign withholding taxes. |
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