NOTE 7—Income Taxes
The current and deferred income tax (expense) benefit is as follows:
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Years ended December 31, |
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2017 |
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2016 |
|
2015 |
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Current: |
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Federal |
|
$ |
— |
|
$ |
(513,000 |
) |
$ |
(972,000 |
) |
|
State |
|
(4,000 |
) |
(155,000 |
) |
(378,000 |
) |
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(4,000 |
) |
(668,000 |
) |
(1,350,000 |
) |
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Deferred: |
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Federal |
|
(495,000 |
) |
34,000 |
|
423,000 |
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State |
|
38,000 |
|
2,000 |
|
85,000 |
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|
(457,000 |
) |
36,000 |
|
508,000 |
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Total income tax expense |
|
$ |
(461,000 |
) |
$ |
(632,000 |
) |
$ |
(842,000 |
) |
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A reconciliation of the effective income tax rate with the applicable statutory federal income tax rate is as follows:
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Years ended December 31, |
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|
2017 |
|
2016 |
|
2015 |
|
|
Federal tax at statutory rate |
|
34.0 |
% |
34.0 |
% |
34.0 |
% |
|
State taxes, net of federal benefit |
|
5.4 |
% |
6.0 |
% |
6.0 |
% |
|
Non-deductible stock based compensation |
|
(11.8 |
)% |
8.4 |
% |
6.3 |
% |
|
Federal tax credit for payroll tax on employee tips |
|
6.7 |
% |
(4.7 |
)% |
(14.6 |
)% |
|
Tax Cuts and Jobs Act |
|
(109.2 |
)% |
— |
|
— |
|
|
Other |
|
(1.0 |
)% |
0.9 |
% |
(0.7 |
)% |
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|
|
|
|
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|
Effective income tax rate |
|
(75.9 |
)% |
44.6 |
% |
31.0 |
% |
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|
The components of deferred income tax assets and liabilities are as follows as of December 31:
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|
2017 |
|
2016 |
|
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|
Deferred income tax assets: |
|
|
|
|
|
||
|
Point loyalty program |
|
$ |
474,000 |
|
$ |
656,000 |
|
|
Accrued expenses |
|
2,827,000 |
|
4,077,000 |
|
||
|
Federal tax credits |
|
131,000 |
|
96,000 |
|
||
|
Other |
|
129,000 |
|
236,000 |
|
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|
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|
Total deferred income tax assets |
|
3,561,000 |
|
5,065,000 |
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Deferred income tax liabilities: |
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|
Depreciation — property and equipment |
|
(1,931,000 |
) |
(3,045,000 |
) |
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|
Total deferred income tax liabilities |
|
(1,931,000 |
) |
(3,045,000 |
) |
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|
Net deferred income tax assets |
|
$ |
1,630,000 |
|
$ |
2,020,000 |
|
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Amounts recognized in the consolidated balance sheet: |
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|
Noncurrent deferred income tax assets |
|
$ |
1,630,000 |
|
$ |
2,020,000 |
|
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The passage of the Tax Cuts and Jobs Act in December of 2017 lowered our federal income tax rate to 21% beginning in 2018 requiring us to revalue our net deferred federal tax assets at December 31, 2017. This resulted in a $662,000 decrease in our net deferred income tax assets and a corresponding increase in deferred income tax expense.