Income Taxes

3 Months Ended

Nov. 26, 2017

Income Tax Disclosure [Abstract]

Income Taxes

5. INCOME TAXES:

The Company’s effective tax rate for its quarter ended November 26, 2017 was 38.1% as compared to a negative (37.9)% for the quarter ended November 27, 2016. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation which applied to the Company beginning with its fiscal year 2018. With ASU No. 2016-09, the Company is required to recognize as income tax expense the tax effect of options that have been cancelled or forfeited. This change could lead to variations in the effective tax rate in any particular quarter. The Company recognized $22,500 of income tax expense related to cancelled stock options during the quarter ended November 26, 2017. Prior to the implementation of ASU No. 2016-09, the tax effect would have been recognized as a reduction to paid-in-capital to the extent that a sufficient paid-in-capital pool existed and therefore not flow through income tax expense. The Company has also determined that certain of its activities the Company performs qualify for the Research & Development tax credit (R&D credit) as defined by Internal Revenue Code Section 41 which reduces the effective tax rate from the statutory rates.