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Note 15 - Income Taxes
 12 Months Ended
Jan. 02, 2021
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
15.
INCOME TAXES
 
Generally, the Company's relative income or loss generated in each of its jurisdictions can materially impact the consolidated effective income tax rate of the Company, particularly the ratio of Canadian and Serbian pretax income, versus United States pretax income. The consolidated effective income tax rate for fiscal
2020
was
26.4%
as compared to
15.8%
for the comparable prior year period.  The Company's United States Federal statutory tax rate for the
fifty-three
week period ended
January 2, 2021
and the comparable prior year period, before any adjustments, was
21.0%.
  The income tax provisions reconciled to the tax computed at the United States Federal statutory rate for both fiscal
2020
and
2019
are as follows:
 
   
January 2,
2021
    
December 28,
2019
  
Federal statutory rate
    
21.0
%
    
21.0
%
Tax expense on taxable (loss) income at federal statutory rate
   $
(2,532
)
   $
1,013
  
State and Puerto Rico income taxes, net of Federal income tax benefit
    
(535
)
    
305
  
Prior year United States R&D tax credits in current year
    
-
      
(668
)
Permanent differences
    
154
      
77
  
Foreign income tax rates
    
(21
)
    
(101
)
Adjustments to NOL and repatriation taxes
    
(53
)
    
154
  
Other
    
(201
)
    
(16
)
Total income tax expense
   $
(3,188
)
   $
764
  
 
The Company did
not
experience any significant adjustments that impacted its
2020
income tax benefit of
$3.2
million. The Company experienced the following significant adjustments for the
2019
fiscal year that impacted its net income tax expense of
$0.8
million: prior year United States R&D tax credits of
$0.7
million recognized in fiscal
2019,
and expense from changes to its United States net operating loss carryforward and repatriation taxes of
$0.2
million.
 
The components of income tax expense are as follows:
 
   
Fiscal Years Ended
  
   
January 2,
2021
    
December 28,
2019
  
Current
                
Federal
   $
(32
)
   $
(688
)
State and local
    
174
      
181
  
Foreign
    
382
      
166
  
     
524
      
(341
)
                 
Deferred
                
Federal
    
(2,844
)
    
892
  
State
    
(851
)
    
229
  
Foreign
    
(17
)
    
(16
)
     
(3,755
)
    
1,105
  
Total
   $
(3,188
)
   $
764
  
 
The components of earnings before income taxes by United States and foreign jurisdictions were as follows:
 
   
Fiscal Years Ended
  
   
January 2,
2021
    
December 28,
2019
  
United States
   $
(13,898
)
   $
3,626
  
Foreign jurisdictions
    
1,841
      
1,196
  
    $
12,057
)
   $
4,822
  
 
The Company accounts for penalties or interest related to uncertain tax positions as part of its provision for income taxes and records such amounts to interest expense.  The Company recorded
no
expense for penalties or interest in the fiscal years ended
January 2, 2021
and
December 28, 2019.
 
At
January 2, 2021
and
December 28, 2019,
deferred tax assets and liabilities consist of the following:
 
   
January 2,
2021
    
December 28,
2019
  
Deferred tax assets:
                
Allowance for doubtful accounts
   $
455
     $
432
  
Federal and state net operating loss carryforward
    
2,634
      
330
  
Reserves and accruals
    
1,491
      
255
  
Other
    
318
      
185
  
Total deferred tax assets
    
4,898
      
1,202
  
                 
Deferred tax liabilities:
                
Acquisition amortization, net
    
(716
)
    
(569
)
Prepaid expense deferral
    
(602
)
    
(701
)
Bonus depreciation to be reversed
    
(280
)
    
(327
)
Canada deferred tax liability, net
    
(365
)
    
(382
)
Total deferred tax liabilities
    
(1,963
)
    
(1,979
)
Total deferred tax assets (liabilities), net
   $
2,935
     $
(777
)
 
The Company has gross net operating losses of
$8.4
million and
$13.6
million to be applied to the net income of future federal and state tax returns, respectively. The principal amount of the federal net operating loss has an unlimited life. The Company conducts business in many states. Net operating losses in these states expire at differing periods but the majority of these expire from
2038
through
2040.
 
The Company accounts for penalties or interest related to uncertain tax positions as part of its provision for income taxes and records such amounts to interest expense. The Company recorded
no
expense for penalties or interest in the fiscal years ended
January 2, 2021
and
December 28, 2019.
 
The Company conducts its operations in multiple tax jurisdictions in the United States, Canada, Puerto Rico and Serbia. The Company and its subsidiaries file a consolidated United States Federal income tax return and file in various states. The Company's federal income tax returns have been examined through
2017.
The Company has
no
open federal audits as of
January 2, 2021.
The State of New Jersey is currently examining fiscal tax years
2009
through
2012.
Except for New Jersey and other limited exceptions, the Company is
no
longer subject to audits by state and local tax authorities for tax years prior to
2017.
The Company is
no
longer subject to audit in Canada for the tax years prior to tax year
2016.
The Company is
no
longer subject to audit in Puerto Rico for the tax years prior to tax year
2010.
 
Differences between the effective tax rate and the applicable U.S. federal statutory rate
may
arise, primarily from the effect of state and local income taxes, share-based compensation, and potential tax credits available to the Company.