INCOME TAXES

12 Months Ended

Sep. 29, 2012

Income Tax Disclosure [Text Block]

12.	INCOME TAXES
	The provision for income taxes attributable to continuing operations consists of the following:

	Year Ended
	September 29, 2012			October 1, 2011
	(In thousands)
Current provision:
Federal	$	469		$	848
State and local		251			907
		720			1,755
Deferred provision:
Federal		3,140			240
State and local		(847	)		(522	)
		2,293			(282	)
	$	3,013		$	1,473

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

	Year Ended
	September 29, 2012			October 1, 2011
	(In thousands)
Provision at Federal statutory rate (34% in 2012 and 2011)	$	3,555		$	2,124
State and local income taxes, net of tax benefits		312			109
Tax credits		(565	)		(503	)
Income attributable to non-controlling interest		(576	)		(302	)
Other		287			45
	$	3,013		$	1,473

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:

	September 29, 2012			October 1, 2011
	(In thousands)
Long-term deferred tax assets (liabilities):
State net operating loss carryforwards	$	3,357		$	2,607
Operating lease deferred credits		1,069			1,228
Depreciation and amortization		(358	)		538
Deferred compensation		1,431			1,172
Partnership investments		(413	)		1,948
Other		108			122
Total long-term deferred tax assets		5,194			7,615
Valuation allowance		(234	)		(362	)
Total net deferred tax assets	$	4,960		$	7,253

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 $234,000 and $362,000 as of September 29, 2012 and October 1, 2011, respectively, was attributable to state and local net operating loss carryforwards which are not realizable on a more-likely-than-not basis.

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

	September 29, 2012		October 1, 2011
	(In thousands)
Balance at beginning of year	$	209	$	209
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 September 29, 2012, the Company accrued approximately $108,000 of interest and penalties. 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. An examination 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 consolidated financial position or results of operations. The 2010 and 2011 fiscal years remain subject to examination by the Internal Revenue Service. The 2008 through 2011 fiscal years generally remain subject to examination by most state and local tax authorities.