INCOME TAXES

12 Months Ended

Jun. 26, 2022

INCOME TAXES [Abstract]

INCOME TAXES

NOTE F - INCOME TAXES:

Benefit from income taxes from continuing operations consists of the following (in thousands):

	Fiscal Year Ended
	June 26, 2022			June 27, 2021
Current - Federal	$	—		$	—
Current - State		(115	)		29
Deferred - Federal		5,537			—
Deferred - State		235			—
Benefit from income taxes	$	5,657		$	29

The effective income tax rate varied from the statutory rate for the fiscal years ended June 26, 2022 and June 27, 2021 as reflected below (in thousands):

	June 26, 2022			June 27, 2021
Federal income taxes based on a statutory rate of 21%	$	(496	)	$	(313	)
State income taxes (net of federal benefit)		127			23
Permanent adjustments		—			(5	)
PPP loan forgiveness		—			138
Change in valuation allowance		6,052			190
Other		(26	)		(4	)
Income tax benefit	$	5,657		$	29

The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (in thousands):

	June 26, 2022		June 27, 2021
Allowance for bad debt	$	6	$	10
Deferred fees		45		34
Other reserves and accruals		652		542
Operating lease liabilities		444		525
Depreciable assets		—		—
Credit carryforwards		156		197
Net operating loss carryforwards		4,987		5,563
Total gross deferred tax asset		6,290		6,871
Valuation allowance		—		(6,307	)
Total deferred tax assets	$	6,290	$	564

Right-of-use asset		(387	)		(461	)
Other deferred tax liabilities		(131	)		(103	)
Total deferred tax liabilities	$	(518	)	$	(564	)

Net deferred tax asset $ 5,772 $ —

For the year ended June 26, 2022, the Company recorded an income tax benefit of $5.7 million including federal deferred tax benefit of $5.5 million and current/deferred state tax benefit of $0.2 million. As of June 26, 2022, the Company had net operating loss carryforwards totaling $23.1 million that are available to reduce future taxable income and will begin to expire in 2032, of which $1.8 million are limited to 80% and do not expire. Tax returns for fiscal 2013 and after will remain open to examination by federal and state tax authorities for three to four years following the tax year in which net operating losses or tax credits are utilized. The Company was not subject to income tax examinations by any tax authority as of June 26, 2022.

The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In assessing the need for the valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets. Future sources of taxable income are also considered in determining the amount of the recorded valuation allowance. Based on this analysis, the Company reversed the full amount of the established valuation allowance as of June 26, 2022. The reversal of the valuation allowance resulting in tax benefit of $5.7 million in fiscal 2022.

There are no material uncertain tax positions. Management’s position is that all relevant requirements are met and necessary returns have been filed, and therefore the tax positions taken on the tax returns would be sustained upon examination.