Note 12 - Income Taxes

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

12. Income Taxes

The components of the income tax provision are as follows:

	2021		2020			2019
Current:
Federal	$	4,437	$	(8,486	)	$	2,150
State		178		155			892
Deferred:
Federal		435		2,457			(2,191	)
State		1,148		(491	)		(663	)
Total	$	6,198	$	(6,365	)	$	188

On March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. A major provision of the CARES Act allows net operating losses from the 2018, 2019 and 2020 tax years to be carried back up to five years. As a result, for the year ended November 28, 2020 we were able to recognize tax benefits substantially in excess of the current federal statutory rate of 21% due to the effects of carrying back our current net operating loss to tax years in which the federal statutory rate was 35%.

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:

	2021			2020			2019
Statutory federal income tax rate		21.0	%		21.0	%		21.0	%
CARES Act benefit		-			21.1			-
State income tax, net of federal benefit		4.2			1.7			(14.0	)
Impairment of non-deductible goodwill		-			(2.5	)		(23.2	)
Excess tax from stock-based compensation		0.4			(0.6	)		0.3
Other		-			(2.8	)		5.1
Effective income tax rate		25.6	%		37.9	%		(10.8	)%

Excess tax (expense) benefits in the amount of $(115), $(114), and $22 were recognized as a component of income tax expense during fiscal 2021, 2020 and 2019, respectively, resulting from the exercise of stock options and the release of restricted shares. The fiscal 2020 and 2019 adjustments for impairment of non-deductible goodwill reflect 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 27, 2021		November 28, 2020
Deferred income tax assets:
Trade accounts receivable	$	199	$	303
Inventories		3,121		3,086
Notes receivable		44		44
Post employment benefit obligations		3,562		3,260
State net operating loss carryforwards		153		1,321
Leases		5,055		5,850
Other		1,180		1,856
Gross deferred income tax assets		13,314		15,720
Valuation allowance		-		-
Total deferred income tax assets		13,314		15,720
Deferred income tax liabilities:
Property and equipment		7,013		8,746
Intangible assets		1,712		1,404
Prepaid expenses and other		1,400		983
Total deferred income tax liabilities		10,125		11,133
Net deferred income tax assets	$	3,189	$	4,587

We have state net operating loss carryforwards available to offset future taxable state income of $3,010, which expire in varying amounts between 2030 and 2040. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards.

Income taxes paid, net of refunds received, during fiscal 2021, 2020 and 2019 were $3,092, $539, and $1,228, 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 27, 2021 and November 28, 2020 were $324 and $68, respectfully. Our liabilities for uncertain tax positions prior to 2021 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 2018 through 2021 for all of our major tax jurisdictions.