Note 13 - Income Taxes

12 Months Ended

Nov. 30, 2024

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:

	2024			2023			2022
Current:
Federal	$	(1,962	)	$	(121	)	$	5,659
State		(273	)		(72	)		2,154
Deferred:
Federal		(1,781	)		846			484
State		(659	)		30			405
Total	$	(4,675	)	$	683		$	8,702

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:

	2024			2023			2022
Statutory federal income tax rate		21.0	%		21.0	%		21.0	%
State income tax, net of federal benefit		5.4			3.8			4.4
Nondeductible goodwill, restructuring and other charges		(6.9	)		(45.7	)		-
Nontaxable gain on revaluation of contingent consideration		-			8.6			-
Capital loss carryback		15.9			-			-
Other		0.4			3.0			(0.3	)
Change in valuation allowance		(3.3	)		(18.2	)		0.4
Effective income tax rate		32.5	%		(27.5	)%		25.5	%

Excess tax benefits in the amount of $9, $10 and $1 were recognized as a component of income tax expense during fiscal 2024, 2023 and 2022, respectively, resulting from the exercise of stock options and the release of restricted shares. The fiscal 2023 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 30, 2024			November 25, 2023
Deferred income tax assets:
Trade accounts receivable	$	278		$	135
Inventories		3,867			3,847
Post employment benefit obligations		2,498			2,426
Federal net operating loss and credit carryforwards		1,107			151
State net operating loss carryforwards		621			2
Foreign net operating loss carryforwards		2,264			1,791
Operating lease liabilities		27,138			29,185
Other		1,182			1,515
Gross deferred income tax assets		38,955			39,052
Valuation allowance		(2,264	)		(1,791	)
Total deferred income tax assets		36,691			37,261
Deferred income tax liabilities:
Property and equipment		4,200			5,894
Intangible assets		1,235			984
Operating lease assets		23,771			25,239
Prepaid expenses and other		618			499
Total deferred income tax liabilities		29,824			32,616
Net deferred income tax assets	$	6,867		$	4,645

We have foreign net operating loss carryforwards attributable to Noa Home (see Note 3) of $10,780 resulting in a deferred tax asset of $2,264 upon which we have placed a full valuation allowance. During fiscal 2024, we generated federal net operating loss carryforwards of $5,152 and state net operating loss carryforwards of $530.

Income tax refunds received, net of taxes paid, during fiscal 2024 and 2023 were $658 and $263, respectively. Income taxes paid, net of refunds received, during fiscal 2022 was $20,176.

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 2021 through 2024 for all of our major tax jurisdictions.