BRIDGFORD FOODS CORP Income Taxes Disclosure

NOTE 4 - Income Taxes:

 

The benefit on income taxes include the following:

 

Schedule of Provision (Benefit) for Taxes on Income

		October 31, 2025				November 1, 2024
		(52 Weeks)				(52 Weeks)
Current:
Federal		$	9			$	(1,163	)
State			147				1,196
Current tax expense benefit			156				33
Deferred:
Federal			(4,488	)			(1,222	)
State			(360	)			(122	)
Deferred tax expense benefit			(4,848	)			(1,344	)
Benefit on provision for income taxes		$	(4,692	)		$	(1,311	)

 

 

The total tax benefit differs from the expected amount computed by applying the statutory federal income tax rate to income before income taxes as follows:

 

Schedule of Tax Provision Differs from Statutory Federal Income Tax Rate

		October 31, 2025				November 1, 2025
		(52 Weeks)				(52 Weeks)
Benefit on federal income taxes at the applicable statutory rate		$	(3,791	)		$	(985	)
Decrease in provision resulting from state income taxes, net of federal income tax benefit			(614	)			(16	)
Non-taxable life insurance gain			(214	)			(421	)
Change in valuation allowance			404				-
Other, net			(477	)			111
Benefit on income taxes		$	(4,692	)		$	(1,311	)

 

Deferred income taxes result from differences in the basis of assets and liabilities for tax and accounting purposes.

 

Schedule of Deferred Income Taxes Results from Differences in Bases of Assets and Liabilities

		October 31, 2025				November 1, 2024
Receivables allowance		$	13			$	29
Returns allowance			150				134
Inventory packaging reserve			742				677
Inventory overhead capitalization			399				314
Employee benefits			587				790
Other			287				218
State taxes payable			161				226
Incentive compensation			194				595
Pension and health care benefits			(199	)			77
Depreciation			(11,370	)			(12,069	)
Net operating loss carry-forward and credits			6,310				1,721
Right of use assets			201				(235	)
Valuation allowance established against state NOL			(503	)			(99	)
Deferred income taxes, net		$	(3,028	)		$	(7,622	)

 

Management is required to evaluate whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and reversals of existing taxable temporary differences.

 

As of October 31, 2025, the Company did not have any valuation allowance against its federal net deferred tax assets. Management reevaluated the need for a valuation allowance at the end of 2024 and determined that some of its California NOL may not be utilized. Therefore, a valuation allowance of $503 has been retained for such portion of the California NOL.

 

As of October 31, 2025, the Company had net operating loss carryforwards of approximately $22,617 for federal and $27,504 for state purposes.

 

The state loss carryforwards will expire at various dates through 2040.

 

In July 2006, the FASB issued guidance to clarify the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This interpretation prescribed a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance also discussed derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The cumulative effect, if any, of applying this guidance is to be reported as an adjustment to the opening balance of retained earnings in the year of adoption. The provisions of this guidance have been incorporated into ASC 740-10.

 

As of October 31, 2025, we have provided a liability of $369 to unrecognized tax benefits related to various federal and state income tax matters. $76 of this liability will reduce our effective income tax rate if the asset is recognized in future reporting periods. We have not identified any new unrecognized tax benefits.

 

As of November 1, 2024, we have provided a liability of $349 to unrecognized tax benefits related to various federal and state income tax matters. $76 of this liability will reduce our effective income tax rate if the asset is recognized in future reporting periods.

 

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

 

Schedule of Reconciliation of Unrecognized Tax Benefits

		October 31, 2025				November 1, 2025
		(52 Weeks)				(52 Weeks)
Balance at beginning of year		$	349			$	331
Additions based on tax positions related to the current year			-				-
Additions for tax positions of prior years			20				18
Balance at end of year		$	369			$	349

 

 

We recognize any future accrued interest and penalties related to unrecognized tax benefits in income tax expense. As of October 31, 2025, we had approximately $81 in accrued interest and penalties which is included as a component of the $369 unrecognized tax benefit noted above.

 

Our federal income tax returns are open to audit under the statute of limitations for the fiscal year ended October 28, 2022, through November 1, 2024.

 

We are subject to income tax in California and various other state taxing jurisdictions. Our state income tax returns are open to audit under the statute of limitations for the fiscal years ended October 29, 2021, through November 1, 2024.

 

We do not anticipate a significant change to the total amount of unrecognized tax benefits within the next 12 months.