INCOME TAXES
The Company derives its revenue from operations in the United States and any foreign activity from discontinued operations is immaterial. For the fiscal years ended, December 28, 2025, December 29, 2024, and December 31, 2023, the Company incurred a loss before income tax provision from continuing operations of $13.4 million, $10.8 million, and $2.9 million, respectively. The Company’s income tax benefit (expense) for the fiscal years are comprised of the following at (in thousands): 
 December 28, 2025December 29,
2024
December 31, 2023
Current:
Federal$219 $766 $776 
State(6)(76)
Total current provision for taxes213 768 700 
Deferred:
Federal1,319 1,045 97 
State349 271 34 
Total deferred provision for taxes1,668 1,316 131 
Federal from discontinued operations(494)(895)1,857 
State from discontinued operations(103)(819)248 
Income tax benefit$1,284 $370 $2,936 
A reconciliation of the provision for income taxes to the tax computed at statutory federal rate after the adoption of ASU 2023-09 is as follows (in thousands):
 December 28,
2025
U.S. federal statutory tax rate$2,817 21 %
State and local income taxes, net of federal388 
Work Opportunity Tax Credit, net396 
Changes in valuation allowance
     Unrealized capital loss carryforward(1,029)(8)
     Unrealized share based compensation(491)(3)
Nontaxable and nondeductible items(200)(1)
Income tax benefit from continuing operations1,881 15 
Income tax expense from discontinued operations(597)(5)
Income tax benefit$1,284 10 %

A reconciliation of the provision for income taxes to the tax computed at statutory federal rate before the adoption of ASU 2023-09 is as follows (in thousands):
 December 29,
2024
December 31,
2023
U.S. federal statutory tax rate$2,265 21 %$610 21 %
State and local income taxes, net of federal216 (29)(1)
Work Opportunity Tax Credit, net— — 299 10 
Nontaxable or nondeductible items(397)(3)(49)(2)
Income tax benefit from continuing operations2,084 20 831 28 
Income tax (expense) benefit from discontinued operations(1,714)(10)2,105 (5)
Income tax benefit$370 10 %$2,936 23 %
Significant components of the Company’s deferred income taxes are as follows at (in thousands): 
 December 28,
2025
December 29,
2024
Deferred tax assets from continuing operations:
Allowance for credit losses$290 $239 
Goodwill and intangible assets249 7,130 
Accrued payroll and expenses714 564 
Operating lease liabilities132 160 
Business interest expense carryforward2,215 1,385 
Share-based compensation581 514 
Net operating loss carry forward6,768 767 
Deferred tax liabilities from continuing operations:
Prepaid expenses and other current assets(282)(610)
Property and equipment(527)(2,119)
Operating lease assets(153)(181)
Valuation allowance(491)— 
Net deferred income taxes from continuing operations9,496 7,849 
Net deferred income taxes from discontinued operations— 606 
Net deferred income taxes$9,496 $8,455 

Historical Timeline

Fiscal YearFiled
2025Mar 30, 2026Showing above
2024Mar 17, 2025
2023Mar 16, 2023
2021Mar 10, 2022
2020Mar 11, 2021
2019Mar 12, 2020
2018Mar 12, 2019
2017Mar 8, 2018
2016Mar 6, 2017
2015Mar 7, 2016

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.