Note 8 - Income Taxes

12 Months Ended

Jun. 28, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

8.

INCOME TAXES

    The Company is required to analyze all material positions it has taken or plans to take in all tax returns that have been filed or should have been filed with all taxing authorities for all years still subject to challenge by those taxing authorities. If the position taken is “more-likely-than-

not”

to be sustained by the taxing authority on its technical merits and if there is more than a

50%

likelihood that the position would be sustained if challenged and considered by the highest court in the relevant jurisdiction, the tax consequences of that position should be reflected in the taxpayer's financial statements.

The Company had

no

material unrecognized tax positions at

June 28, 2020

nor does it expect any significant change in that status during the next

twelve

months.

No

accrued interest or penalties on uncertain tax positions have been included on the consolidated statements of earnings and comprehensive earnings or the consolidated balance sheet. Should the Company adopt tax positions for which it would be appropriate to accrue interest and penalties, such costs would be reflected in the tax expense for the period in which such costs accrued. The Company is subject to U.S. Federal income tax and to several state jurisdictions. Returns filed for tax periods ending after

July 3, 2016

are still open to examination by those relevant taxing authorities.

    The significant components of the Company's deferred tax assets and liabilities were as follows:

	Ju ne 28 , 2020		June 30, 2019
Deferred tax assets:
Other	$	11,281	$	9,169
Total deferred tax assets		11,281		9,169
Deferred tax liabilities:
Land, buildings, and equipment		487,387		447,848
Unrealized gain on securities		850,285		964,828
Total deferred tax liabilities		1,337,672		1,412,676
Net deferred income taxes	$	1,326,391	$	1,403,507

   Income tax expense differs from the amounts computed by applying the U.S. Federal income tax rate to income before tax for the following reasons:

	For the Years Ended
	20 20			2019
Taxes computed at statutory rate		21.0	%		21.0	%
State income taxes, net of Federal income tax benefit		3.5			3.8
Dividends received exclusion		(9.6	)		(0.9	)
Tip credit and other		(14.7	)		(1.2	)
Net effective rate		0.2	%		22.7	%

The Company's income tax rate is significantly lower than statutory rates primarily due to the exclusion of

50%

of dividend income from federal taxation as well as the federal tip credit offsetting income taxes owed by the Company.