BASSETT FURNITURE INDUSTRIES INC Income Taxes Disclosure

13.	Income Taxes

 

The components of the income tax provision from operations are as follows:

 

		2025				2024				2023
Current:
Federal		$	1,538			$	(1,962	)		$	(121	)
State			210				(273	)			(72	)
Deferred:
Federal			545				(1,781	)			846
State			367				(659	)			30
Total		$	2,660			$	(4,675	)		$	683

 

A reconciliation of the statutory federal income tax rate and the effective income tax rate, as a percentage of income before income taxes, is as follows:

 

		2025				2024				2023
Statutory federal income tax rate			21.0	%			21.0	%			21.0	%
State income tax, net of federal benefit			5.2				5.4				3.8
Nondeductible goodwill, restructuring and other charges			6.2				(6.5	)			(42.7	)
Nontaxable gain on revaluation of contingent consideration			-				-				8.6
Capital loss carryback			(2.0	)			15.9				-
Change in valuation allowance			-				(3.3	)			(18.2	)
Effective income tax rate			30.4	%			32.5	%			(27.5	)%

 

Excess tax benefits (deficiencies) in the amount of $(21), $(9) and $10 were recognized as a component of income tax expense during fiscal 2025, 2024 and 2023, respectively, resulting from the exercise of stock options and the release of restricted shares. The fiscal 2023 adjustment for impairment of non-deductible goodwill reflects the fact that there was no tax basis related to the impaired goodwill.

 

In July of 2025, new tax legislation was enacted under the One Big Beautiful Bill Act (the “Act”). While the Act includes a wide range of provisions that could impact our financial results in future periods, the passage of the Act did not have a material impact on our results of operations or financial condition in fiscal 2025.

 

The income tax effects of temporary differences and carryforwards, which give rise to significant portions of the deferred income tax assets and deferred income tax liabilities, are as follows:

 

		November 29, 2025				November 30, 2024
Deferred income tax assets:
Trade accounts receivable		$	108			$	278
Inventories			4,070				3,867
Post employment benefit obligations			2,652				2,498
Federal net operating loss and credit carryforwards			-				1,107
State net operating loss carryforwards			374				621
Foreign net operating loss carryforwards			2,264				2,264
Operating lease liabilities			22,527				27,138
Other			1,142				1,182
Gross deferred income tax assets			33,137				38,955
Valuation allowance			(2,264	)			(2,264	)
Total deferred income tax assets			30,873				36,691
Deferred income tax liabilities:
Property and equipment			3,443				4,200
Intangible assets			1,472				1,235
Operating lease assets			19,438				23,771
Prepaid expenses and other			541				618
Total deferred income tax liabilities			24,894				29,824
Net deferred income tax assets		$	5,979			$	6,867

 

We have foreign net operating loss carryforwards attributable to Noa Home of $10,780 resulting in a deferred tax asset of $2,264 upon which we have placed a full valuation allowance. As of November 29, 2025, we have no remaining federal net operating loss carryforwards and we have state net operating loss carryforwards totaling $6,799 expiring in various years through 2044.

 

Income taxes paid, net of refunds received, during fiscal 2025 was $379. Income tax refunds received, net of taxes paid, during fiscal 2024 and 2023 were $658 and $263, respectively.

 

We regularly evaluate, assess and adjust our accrued liabilities for unrecognized tax benefits in light of changing facts and circumstances, which could cause the effective tax rate to fluctuate from period to period. Our liabilities for uncertain tax positions are not material.

 

Significant judgment is required in evaluating the Company's federal and state tax positions and in the determination of its tax provision. Despite our belief that the liability for unrecognized tax benefits is adequate, it is often difficult to predict the final outcome or the timing of the resolution of any particular tax matter. We may adjust these liabilities as relevant circumstances evolve, such as guidance from the relevant tax authority, or resolution of issues in the courts. These adjustments are recognized as a component of income tax expense in the period in which they are identified. The Company also cannot predict when or if any other future tax payments related to these tax positions may occur.

 

We remain subject to examination for tax years 2022 through 2025 for all of our major tax jurisdictions.