INCOME TAXES

12 Months Ended

Oct. 01, 2011

Income Tax Disclosure [Text Block]

13. INCOME TAXES

The provision for income taxes attributable to continuing operations consists of the following:

	Year Ended
	October 1, 2011			October 2, 2010
	(In thousands)
Current provision:
Federal	$	342		$	1,568
State and local		907			486
		1,249			2,054
Deferred provision:
Federal		(582	)		(850	)
State and local		(522	)		(83	)
		(1,104	)		(933	)
	$	145		$	1,121

The effective tax rate differs from the U.S. income tax rate as follows:

	Year Ended
	October 1, 2011			October 2, 2010
	(In thousands)
Provision at Federal statutory rate (34% in 2011 and 2010)	$	883		$	1,169
State and local income taxes, net of tax benefits		134			172
Tax credits		(503	)		(401	)
(Income) loss attributable to non-controlling interest		(302	)		98
Other		(67	)		83
	$	145		$	1,121

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	October 1, 2011			October 2, 2010
	(In thousands)
Long-term deferred tax assets (liabilities):
State net operating loss carryforwards	$	2,607		$	2,094
Operating lease deferred credits		1,228			1,278
Depreciation and amortization		538			876
Deferred compensation		1,172			1,101
Partnership investments		1,948			964
Other		122			122
Total long-term deferred tax assets		7,615			6,435
Valuation allowance		(362	)		(252	)
Net long-term deferred tax assets		7,253			6,183
Deferred gains		-			(34	)
Total long-term deferred tax liabilities		-			(34	)
Total net deferred tax assets	$	7,253		$	6,149

In assessing the realizability of deferred tax assets, Management considers whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. The deferred tax valuation allowance of $362,000 and $252,000 as of October 1, 2011 and October 2, 2010, respectively, was attributable to state and local net operating loss carryforwards.

As of October 1, 2011, the Company has approximately of $28,668,000 of state and local net operating loss carryforwards which expire at various times beginning in 2015 through 2031.

A reconciliation of the beginning and ending amount of unrecognized tax benefits excluding interest and penalties is as follows:

	October 1, 2011		October 2, 2010
	(In thousands)
Balance at beginning of year	$	209	$	209
Additions based on tax positions taken in current and prior years		-		-
Reductions due to settlements with taxing authorities		-		-
Reductions as a result of a lapse of the statute of limitations		-		-
Interest accrued during the current year		-		-
Balance at end of year	$	209	$	209

The entire amount of unrecognized tax benefits if recognized would reduce our annual effective tax rate. As of October 1, 2011 and October 2, 2010, the Company accrued approximately $85,000 and $63,000 of interest and penalties, respectively. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. Inherent uncertainties exist in estimates of tax contingencies due to changes in tax law, both legislated and concluded through the various jurisdictions’ tax court systems.

The Company files tax returns in the U.S. and various state and local jurisdictions with varying statutes of limitations. The 2008 through 2010 fiscal years generally remain subject to examination by most state and local tax authorities. An audit of the Company’s Federal tax returns for the fiscal years 2008 and 2009 was recently completed by the Internal Revenue Service and did not result in a material adjustment to the Company’s financial position or results of operations. The 2010 fiscal year remains subject to examination by the Internal Revenue Service.