Note 10 - Income Taxes

12 Months Ended

Mar. 31, 2013

Income Tax Disclosure [Text Block]

NOTE J - INCOME TAXES

The income tax provision (benefit) consists of the following for the fiscal years ended March 31, 2013, March 25, 2012 and March 27, 2011:

	March 31, 2013		March 25, 2012		March 27, 2011
Federal
Current	$	3,237	$	1,274	$	2,330
Deferred		377		1,566		(1,545	)
		3,614		2,840		785
State and local
Current		937		534		734
Deferred		120		475		(412	)
		1,057		1,009		322
	$	4,671	$	3,849	$	1,107

The total income tax provision for the fiscal years ended March 31, 2013, March 25, 2012 and March 27, 2011 differs from the amounts computed by applying the United States Federal income tax rate of 34% to income before income taxes as a result of the following:

	March 31, 2013			March 25, 2012			March 27, 2011
Computed “expected” tax expense	$	4,127		$	3,412		$	1,129
State and local income taxes, net of Federal income tax benefit		633			682			274
Tax-exempt investment earnings		(133	)		(178	)		(244	)
Change in uncertain tax positions, net		22			(24	)		(94	)
Nondeductible meals and entertainment and other		22			(43	)		42
	$	4,671		$	3,849		$	1,107

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

	March 31, 2013			March 25, 2012
Deferred tax assets
Accrued expenses	$	166		$	183
Allowance for doubtful accounts		49			44
Deferred revenue		510			520
Deferred stock compensation		646			830
Excess of straight line over actual rent		316			340
Other		127			20
Total gross deferred tax assets	$	1,814		$	1,937
Deferred tax liabilities
Deductible prepaid expense		223			191
Unrealized gain on marketable securities		202			307
Depreciation expense		321			12
Other		243			211
Total gross deferred tax liabilities		989			721
Net deferred tax asset		825			1,216
Less current portion		(345	)		(338	)
Long-term portion	$	480		$	878

A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. We consider the level of historical taxable income, scheduled reversal of temporary differences, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted. Based upon these considerations, management believes that it is more likely than not that the Company will realize the benefit of its net deferred tax asset of $825 and $1,216 at March 31, 2013 and March 25, 2012, respectively.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, for the fiscal years ended March 31, 2013 and March 25, 2012.

	March 31, 2013			March 25, 2012
Unrecognized tax benefits, beginning of year	$	422		$	318
Increases based on tax positions taken in prior years		---			119
Decreases of tax positions taken in prior years		(50	)		(41	)
Increase based on tax positions taken in current year		34			26
Settlements of tax positions taken in prior years		(110	)		-
Unrecognized tax benefits, end of year	$	296		$	422

The amount of unrecognized tax benefits at March 31, 2013 and March 25, 2012 was $296 and $422, respectively, all of which would impact Nathan’s effective tax rate, if recognized.  As of March 31, 2013 and March 25, 2012, the Company had $337 and $356, respectively, accrued for the payment of interest and penalties. For the fiscal years ended March 31, 2013, March 25, 2012 and March 27, 2011 Nathan’s recognized interest and penalties in the amounts of $46, $47, and $44, respectively. The Company believes that it is reasonably possible that decreases in unrecognized tax benefits of up to $34 may be recorded within the next year.

Nathan’s is subject to tax in the U.S. and various state and local jurisdictions. During the fiscal year ended March 31, 2013, the City of New York (“NYC”) completed its examination of our tax returns for the tax years ended March 2008 through March 2010.  In July 2012, Nathan’s and NYC agreed to and settled the audit findings for $129, including interest, an amount approximating the originally proposed findings, which had previously been accrued in Nathan’s consolidated financial statements for the fiscal year ended March 25, 2012. Nathan’s tax returns in the State of Florida fiscal years ended March 2008, March 2009 and March 2010 have been reviewed and the Commonwealth of Massachusetts for the fiscal years ended March 2008, March 2009, March 2010 and March 2011 have also been reviewed. The Florida and Massachusetts reviews were settled for approximately $13 in the aggregate.

The earliest tax years’ that are subject to examination by taxing authorities by major jurisdictions are as follows:

Jurisdiction	Fiscal Year
Federal	2010
New York State	2010
New York City	2010