RAVE RESTAURANT GROUP, INC.RAVE

RAVE RESTAURANT GROUP, INC. Income Taxes Disclosure

10-KFiled Sep 25, 20253 min read
NOTE E - INCOME TAXES:
 
Provision for income taxes from continuing operations consists of the following (in thousands):
 
                 
  Fiscal Year Ended
   
June 29,
2025
     
June 30,
2024
     
June 25,
2023
 
Current - Federal
$ —     $ —     $ —  
Current - State
 156     33     107 
Deferred - Federal
 793     530     394 
Deferred - State
 (31)     56     36 
Provision for income taxes
$918    $619    $537 
 
The effective income tax rate varied from the statutory rate for the fiscal years ended June 29, 2025, June 30, 2024, and June 25, 2023 as reflected below (in thousands):
 
                 
  Fiscal Year Ended
   
June 29,
2025
     
June 30,
2024
     
June 25,
2023
 
Federal income taxes based on a statutory rate of 21%
$760    $649    $452 
State income taxes (net of federal benefit)
 99     82     119 
Permanent Adjustments
 (31)     (128)     7 
Return to Provision
  —      16     (49)
Other
 90      —      8 
Provision for income taxes
$918    $619    $537 
 
The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (in thousands):
 
        
   
June 29,
2025
     
June 30,
2024
 
Allowance for credit losses
$7    $13 
Deferred fees
 55     58 
Other reserves and accruals
 420     475 
Operating lease liabilities
 135     222 
Credit carryforwards
 56     156 
Net operating loss carryforwards
 3,503     4,057 
Total deferred tax assets
$4,176    $4,981 
Right-of-use assets
 (115)     (190) 
Other deferred tax liabilities
 (66)     (35) 
Total deferred tax liabilities
$(181)    $(225) 
Net deferred tax asset
$3,995    $4,756 
The Company utilized net operating losses to offset federal taxes. At the end of tax year June 29, 2025, the Company had federal net operating loss carryforwards totaling $16 million that are available to reduce future taxable income and will begin to expire in 2035. Under the Tax Cuts and Jobs Act, approximately $1.3 million of the loss carryforwards are limited to 80% and do not expire. Tax years that remain subject to examination by the IRS are the years ended June 28, 2022 through June 30, 2024. Tax years that remain subject to examination by state authorities are the years ended June 30, 2021 through June 30, 2024.
 
The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In assessing the need for a valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets. Future sources of taxable income are also considered in determining the amount of any required valuation allowance. As of June 29, 2025 and June 30, 2024, the Company determined that no valuation allowance was necessary.
 
There are no material uncertain tax positions. Management’s position is that all relevant requirements are met and necessary returns have been filed, and therefore the tax positions taken on the tax returns would be sustained upon examination.

Historical Timeline

Fiscal YearFiled
2025Sep 25, 2025Showing above
2024Sep 26, 2024
2023Sep 21, 2023
2022Sep 23, 2022
2021Sep 21, 2021
2020Sep 28, 2020
2019Sep 30, 2019
2018Sep 24, 2018
2016Sep 23, 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.

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