Note H - Income Taxes

12 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE H – INCOME TAXES

The income tax provision consists of the following for the fiscal years ended March 31, 2024 and March 26, 2023:                  

	March 31,		March 26,
	2024		2023
Federal
Current	$	5,767	$	5,293
Deferred		118		137
Total Federal income tax		5,885		5,430
State and local
Current		1,903		1,681
Deferred		47		70
Total State and local income tax		1,950		1,751
Total provision for income taxes	$	7,835	$	7,181

The income tax provisions for the fiscal years ended March 31, 2024 and March 26, 2023 reflect effective tax rates of 28.5% and 26.8%, respectively.

The total income tax provision for the fiscal years ended March 31, 2024 and March 26, 2023 differs from the amounts computed by applying the United States Federal income tax rate of 21% to income before income taxes as a result of the following:                                   

	March 31,			March 26,
	2024			2023
Income tax provision at the U.S. Federal statutory rate	$	5,765		$	5,629
State and local income taxes, net of U.S. Federal income tax benefit		1,485			1,339
Change in uncertain tax positions, net		73			63
Nondeductible meals and entertainment and other		(24	)		(45	)
Nondeductible executive compensation		536			195
Total provision for income taxes	$	7,835		$	7,181

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,		March 26,
	2024		2023
Deferred tax assets
Accrued expenses	$	303	$	348
Allowance for credit losses		101		120
Deferred revenue		305		402
Deferred stock compensation		28		78
Operating lease liability		1,505		1,550
Other		151		135
Total deferred tax assets	$	2,393	$	2,633
Deferred tax liabilities
Deductible prepaid expense	$	150	$	147
Operating lease right-of-use asset		1,373		1,390
Depreciation expense		465		549
Amortization		130		172
Total deferred tax liabilities		2,118		2,258
Net deferred tax asset	$	275	$	375

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 deferred tax asset.

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, 2024 and March 26, 2023:

	March 31, 2024			March 26, 2023
Unrecognized tax benefits, beginning of year	$	432		$	403
Decreases of tax positions taken in prior years		(19	)		(16	)
Increases based on tax positions taken in current year		52			45
Unrecognized tax benefits, end of year	$	465		$	432

The amount of unrecognized tax benefits included in Other liabilities at March 31, 2024 and March 26, 2023 were $465 and $432, respectively, all of which would impact Nathan’s effective tax rate, if recognized. As of March 31, 2024 and March 26, 2023, the Company had $345 and $305, respectively, accrued for the payment of interest and penalties. For the fiscal years ended March 31, 2024 and March 26, 2023 Nathan’s recognized interest and penalties in the amounts of $41 and $33, respectively.

During the fiscal year ending March 30, 2025, we believe it is reasonably possible the amount of unrecognized tax benefits, excluding the related accrued interest and penalties, could be reduced by up to $46, due primarily to the lapse of statutes of limitations which would favorably impact Nathan’s effective tax rate, although no assurances can be given in this regard.

On August 16, 2022 the United States enacted the Inflation Reduction Act. Among other provisions, this law imposes a 1% excise tax on stock buybacks made after December 31, 2022, with certain exceptions including stock repurchases of less than $1,000 within a tax year. We do not expect this law to have a material impact on our consolidated financial statements.

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

Jurisdiction	Fiscal Year
Federal	2021
New York State	2021
New York City	2021
New Jersey	2020
California	2020