Note 14 - Income Taxes

12 Months Ended

Nov. 30, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

14. Income Taxes

The components of the income tax provision are as follows:

	2019			2018			2017
Current:
Federal	$	2,150		$	(1,137	)	$	7,887
State		892			462			2,035
Deferred:
Increase (decrease) in
Federal		(2,191	)		4,747			(200	)
State		(663	)		(84	)		(102	)
Total	$	188		$	3,988		$	9,620

On December 22, 2017, The Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act reduced the federal statutory corporate income tax rate from 35% to 21% effective January 1, 2018 for all corporate taxpayers, while most other provisions of the Act became effective for fiscal years beginning on or after January 1, 2018. Therefore, we computed our income tax expense for fiscal 2018 using a blended federal statutory rate of 22.2%. The 21% federal statutory rate, as well as certain other provisions of the Act including the elimination of the domestic manufacturing deduction and new limitations on certain business deductions, applies to our 2019 fiscal year and thereafter. The federal rate reduction had a significant impact on our provision for income taxes for fiscal 2018 due to a discrete charge of $1,331 arising from the re-measurement of our deferred tax assets. Our accounting for the income tax effects of the Act was complete as of November 24, 2018.

A reconciliation of the statutory federal income tax rate and the effective income tax rate, as a percentage of income before income taxes, is as follows:

	2019			2018			2017
Statutory federal income tax rate		21.0	%		22.2	%		35.0	%
Revaluation of deferred tax assets resulting from new enacted rates		-			10.9			-
State income tax, net of federal benefit		(14.0	)		4.6			3.9
Impairment of non-deductible goodwill		(23.2	)		-			-
Excess tax benefits from stock-based compensation		0.3			(1.5	)		(1.8	)
Other		5.1			(3.5	)		(2.6	)
Effective income tax rate		(10.8	)%		32.7	%		34.5	%

Excess tax benefits in the amount of $22, $223 and $554 were recognized as a component of income tax expense during fiscal 2019, 2018 and 2017, respectively, resulting from the exercise of stock options and the release of restricted shares. The fiscal 2019 adjustment for impairment of non-deductible goodwill reflects the fact that there was no tax basis related to the impaired goodwill.

The income tax effects of temporary differences and carryforwards, which give rise to significant portions of the deferred income tax assets and deferred income tax liabilities, are as follows:

	November 30, 2019		November 24, 2018
Deferred income tax assets:
Trade accounts receivable	$	207	$	192
Inventories		2,487		1,755
Notes receivable		44		109
Post employment benefit obligations		3,241		3,619
State net operating loss carryforwards		193		218
Unrealized loss from affiliates		81		15
Net deferred rents		3,753		3,199
Other		1,828		1,290
Gross deferred income tax assets		11,834		10,397
Valuation allowance		-		-
Total deferred income tax assets		11,834		10,397
Deferred income tax liabilities:
Property and equipment		4,288		5,353
Intangible assets		1,114		1,060
Prepaid expenses and other		688		718
Total deferred income tax liabilities		6,090		7,131
Net deferred income tax assets	$	5,744	$	3,266

We have state net operating loss carryforwards available to offset future taxable state income of $4,095, which expire in varying amounts between 2021 and 2027. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards.

Income taxes paid, net of refunds received, during 2019, 2018 and 2017 were $1,228, $1,431, and $7,516, respectively.

We regularly evaluate, assess and adjust our accrued liabilities for unrecognized tax benefits in light of changing facts and circumstances, which could cause the effective tax rate to fluctuate from period to period. Our accrued liabilities for uncertain tax benefits at November 30, 2019 and November 24, 2018 were not material.

Significant judgment is required in evaluating the Company's federal and state tax positions and in the determination of its tax provision. Despite our belief that the liability for unrecognized tax benefits is adequate, it is often difficult to predict the final outcome or the timing of the resolution of any particular tax matter. We may adjust these liabilities as relevant circumstances evolve, such as guidance from the relevant tax authority, or resolution of issues in the courts. These adjustments are recognized as a component of income tax expense in the period in which they are identified. The Company also cannot predict when or if any other future tax payments related to these tax positions may occur.

We remain subject to examination for tax years 2016 through 2019 for all of our major tax jurisdictions.