| (8) Income Taxes | (8) Income Taxes Components of income tax expense (benefit)
for each year are as follows:
2016 2015 2014
Current
Federal $ $ (2,286) $ 15,985
State 456 456 1,011
Current income tax provision (benefit): 456 (1,830) 16,996
Deferred:
United States:
Federal (526,922) 168,371 200,926
State (149,678) 7,691 226
Deferred income tax provision (benefit), net (676,600) 176,062 201,152
Total $ (676,144) $ 174,232 $ 218,148 Deferred tax assets as of December 31, 2016
and December 26, 2015 are as follows:
December 31, 2016 December 26, 2015
Deferred Tax Assets:
Net operating loss
carryforwards $ 363,000 $
Stock compensation 628,000 553,000
Credit carryforwards 1,265,000 1,018,000
Inventory 369,000 424,000
Accrued liabilities 27,000 39,000
Depreciation 171,000 112,000
Other 4,000 5,000
Gross deferred tax assets 2,827,000 2,151,000
Valuation allowance
Net deferred tax assets $ 2,827,000 $ 2,151,000
At December 31, 2016 the Company had net operating
loss carryforwards of approximately $923,000 available to offset future income for U.S. Federal income tax purposes. At December
26, 2015 the Company had no operating loss carryforwards available. During 2015 the Company utilized all prior
net operating loss carryforwards of $740,000. A valuation allowance is required to be established
or maintained when it is "more likely than not" that all or a portion of deferred tax assets will not be realized. The
Company believes that it will generate sufficient future taxable i ncome to realize the tax benefits
related to the remaining deferred tax assets. Current projections of future taxable income, including the reversal of temporary
differences, reflect the Company’s belief that it has attractive growth opportunities and a favorable cost structure. These
projections support the conclusion that the Company will generate taxable income sufficient to utilize the losses before they
expire. A
summary of the change in the deferred tax asset is as follows:
2016 2015 2014
Balance at beginning of year $ 2,150,749 $ 2,300,465 $ 2,475,902
Deferred tax (expense) benefit 676,600 (149,716) (175,437)
Balance at end of year $ 2,827,349 $ 2,150,749 $ 2, 300,465
Income tax expense is different from the amounts
computed by applying the U.S. federal statutory income tax rate of 34 percent to pretax income as a result of the following:
2016 2015 2014
Tax at statutory rate $ 384,000 $ 212,000 $ 415,000
State tax, net
of federal benefit 450 450 1,000
Net operating loss and
credit carryforwards (249,450) (34,450) (190,000)
Other (43,000) (4,000) (8,000)
Total $ (676,000) $ 174,000 $ 218,000 The Company’s income tax filings are
subject to review and examination by federal and state taxing authorities. The Company is currently open to audit under the applicable
statutes of limitations for the years 2013 through 2016. |
