FLANIGANS ENTERPRISES INC Income Taxes Disclosure

NOTE 10. INCOME TAXES

 

The components of our provision for income taxes for our fiscal years 2025 and 2024 are as follows:

 

		(in thousands)
		2025				2024
Current:
Federal		$	267			$	246
State			277				305
			544				551
Deferred:
Federal			(1	)			(282	)
State			79				17
			78				(265	)
		$	622			$	286

 

A reconciliation of income tax computed at the statutory federal rate to income tax expense is as follows:

 

		(in thousands)
		2025				2024
Tax provision at the statutory rate		$	1,814			$	1,173
Non-controlling interests			(627	)			(408	)
State income taxes, net of federal income tax			279				264
FICA tip credit			(1,112	)			(1,029	)
True up adjustment			46				77
Other permanent items, net			222				209
		$	622			$	286

 

We have deferred tax liabilities and assets which arise primarily due to depreciation recorded at different rates for tax and book purposes offset by cost basis differences in depreciable assets due to the deferral of the recognition of insurance recoveries on casualty losses for tax purposes, investments in and management fees paid by limited partnerships, accruals for potential uninsured claims, bonuses accrued for book purposes but not paid within two and a half months for tax purposes, the capitalization of certain inventory costs for tax purposes not recognized for financial reporting purposes, the recognition of revenue from gift cards and other promotional programs not redeemed within twelve months of issuance, allowances for uncollectable receivables, unfunded limited retirement commitments, book-tax differences related to operating leases, interest rate swap mark-to-market adjustments and FICA tax credit.

 

The components of our deferred tax assets (liabilities) at September 27, 2025 and September 28, 2024 were as follows:

 

		(in thousands)
		2025				2024
Deferred tax assets:
Reversal of aged payables		$	18			$	18
Capitalized inventory costs			26				26
Accrued bonuses			77				52
Accruals for potential uninsured claims			45				27
Gift cards			271				247
Deferred revenue			92				205
Tip credit			1,200				914
Operating lease liabilities			3,208				3,319
Limited partnership investments			353				446
Accrued limited retirement			73				76
Interest rate swaps			—				14
Subtotal		$	5,363			$	5,344
Less: Valuation allowance			—				—
Total net deferred tax assets			5,363				5,344

		(in thousands)
		2025				2024
Deferred tax liabilities:
Limited partnership management fees		$	(636	)		$	(680	)
Book/tax differences in property and equipment and intangible assets			(2,154	)			(1,901	)
Operating lease right of use assets			(3,020	)			(3,152	)
Interest Rate Swaps			(34	)			—
Total deferred tax liabilities			(5,844	)			(5,733	)
Net deferred tax liability		$	(481	)		$	(389	)

 

As of September 27, 2025, the Company has federal general business credit carryforward of $1,200,000. General business credit carryovers can be carried back 1 year and carried forward 20 years. The Company’s general business credit carryforward will begin to expire in fiscal year 2044. The Company and its subsidiaries file a U.S. Corporation federal income tax return and a Florida Corporation income tax return. These returns are subject to examination by taxing authorities for all fiscal years after 2021.