Note 13 - Income Taxes

12 Months Ended

Nov. 26, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

13. Income Taxes

The components of the income tax provision from continuing operations are as follows:

	2022		2021		2020
Current:
Federal	$	5,659	$	4,507	$	(8,233	)
State		2,154		171		148
Deferred:
Federal		484		60		2,067
State		405		1,098		(518	)
Total	$	8,702	$	5,836	$	(6,536	)

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:

	2022			2021			2020
Statutory federal income tax rate		21.0	%		21.0	%		21.0	%
Adjustments to state net operating CARES Act benefit		-			-			19.2
State income tax, net of federal benefit		4.4			4.2			1.7
Impairment of non-deductible goodwill		-			-			(2.5	)
Excess tax from stock-based compensation		-			0.4			(0.6	)
Other		0.1			(0.1	)		(2.5	)
Effective income tax rate		25.5	%		25.5	%		36.3	%

Excess tax benefits (expense) in the amount of $1, $(115) and $(114) were recognized as a component of income tax expense during fiscal 2022, 2021 and 2020, respectively, resulting from the exercise of stock options and the release of restricted shares. The fiscal 2020 adjustment 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 26, 2022			November 27, 2021
Deferred income tax assets:
Trade accounts receivable	$	315		$	199
Inventories		3,782			3,121
Notes receivable		-			44
Post employment benefit obligations		2,734			3,562
State net operating loss carryforwards		9			153
Foreign net operating loss carryforwards		1,339			-
Operating lease liabilities		29,423			34,813
Other		1,713			1,180
Gross deferred income tax assets		39,315			43,072
Valuation allowance		(1,339	)		-
Total deferred income tax assets		37,976			43,072
Deferred income tax liabilities:
Property and equipment		5,532			7,013
Intangible assets		726			1,712
Operating lease assets		25,166			29,758
Prepaid expenses and other		1,024			1,400
Total deferred income tax liabilities		32,448			39,883
Net deferred income tax assets	$	5,528		$	3,189

We have state net operating loss carryforwards available to offset future taxable state income of $238, which expire in varying amounts between 2030 and 2040. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. We also have foreign net operating loss carryforwards attributable to Noa Home (see Note 3) of $5,357, substantially all of which related to pre-acquisition losses, resulting in a deferred tax asset of $1,339 upon which we have placed a full valuation allowance.

Income taxes paid, net of refunds received, during fiscal 2022, 2021 and 2020 were $20,176, $3,092, and $539, 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 liabilities for uncertain tax positions are 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 2019 through 2022 for all of our major tax jurisdictions.