Entity information:
NOTE J - INCOME TAXES
 
The income tax provision consists of the following for the fiscal years ended
March 26, 2017,
March 27, 2016
and
March 29, 2015:          
 
 
 
March 26,
2017
 
  
March 27,
2016
    
March 29,
2015
  
Federal
                        
Current
 
$
3,024
 
   $
3,176
    $
5,992
 
Deferred
 
 
79
 
    
(11
 )    
60
  
Total Federal income tax
 
 
3,103
 
    
3,165
      
6,052
  
State and local
                        
Current
 
 
1,195
 
    
1,135
      
1,599
  
Deferred
 
 
21
 
    
(12
 )    
51
  
Total State and local income tax
 
 
1,216
 
    
1,123
      
1,650
  
Total provision for income taxes
 
$
4,319
 
   $
4,288
    $
7,702
 
 
The total income tax provision for the fiscal years ended
March 26, 2017,
March 27, 2016
and
March 29, 2015
differs from the amounts computed by applying the United States Federal income tax rate of
34%,
34%
and
35%,
respectively to income before income taxes as a result of the following:
 
 
  
March
26
,
201
7
    
March 27,
2016
    
March 29,
2015
  
                         
Computed “expected” tax expense
 
$
4,013
     $
3,531
    $
6,792
 
State and local income taxes, net of Federal income tax benefit
 
 
797
      
826
      
1,112
  
Tax-exempt investment earnings
 
 
-
 
    
(9
 )    
(63
 )
Change in uncertain tax positions, net
 
 
(11
)
    
(129
 )    
(62
 )
Nondeductible meals and entertainment and other
 
 
61
      
69
      
(77
 )
Nondeductible compensation
 
 
118
      
-
      
-
  
Tax benefit share based payments
 
 
(659
)
    
-
      
-
  
Total provision for income taxes
 
$
4,319
     $
4,288
    $
7,702
 
 
 
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:
 
 
  
March 
26
,
    
March 27,
  
 
  
201
7
    
2016
  
Deferred tax assets
                
Accrued expenses
 
$
361
     $
236
 
Allowance for doubtful accounts
 
 
59
      
62
  
Deferred revenue
 
 
347
      
393
  
Deferred stock compensation
 
 
224
      
271
  
Excess of straight line over actual rent
 
 
338
      
379
  
Investment
 
 
187
      
151
  
Other
 
 
104
      
119
  
Total gross deferred tax assets
 
$
1,620
     $
1,611
 
                 
Deferred tax liabilities
                
Deductible prepaid expense
 
 
288
      
263
  
Depreciation expense
 
 
1,771
      
1,717
  
Amortization
 
 
374
      
344
  
Total gross deferred tax liabilities
 
 
2,433
      
2,324
  
Net deferred tax (liability)
 
$
(813
)
   $
(713
 )
 
A valuation allowance is provided when it is more likely than
not
that some portion, or all, of the deferred tax assets will
not
be realized. We consider the level of historical taxable income, scheduled reversal of temporary differences, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted. Based upon these considerations, management believes that it is more likely than
not
that the Company will realize the benefit of its gross deferred tax asset.
 
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, for the fiscal years ended
March 26, 2017,
March 27, 2016
and
March 29, 2015.
 
 
 
March 26,
2017
 
  
March 27,
2016
    
March 29,
2015
  
                         
Unrecognized tax benefits, beginning of year
 
$
208
 
   $
266
    $
283
 
Decreases of tax positions taken in prior years
 
 
(31
)
    
(98
 )    
(64
 )
Increases based on tax positions taken in current year
 
 
41
 
    
43
      
47
  
Settlements of tax positions taken in prior years
 
 
(51
)
    
(3
 )    
-
  
Unrecognized tax benefits, end of year
 
$
167
 
   $
208
    $
266
 
 
 
The amount of unrecognized tax benefits at
March 26, 2017,
March 27, 2016
and
March 29, 2015
were
$167
,
$208
and
$266,
respectively, all of which would impact Nathan’s effective tax rate, if recognized. As of
March 26, 2017
and
March 27, 2016,
the Company had
$183
and
$200,
respectively, accrued for the payment of interest and penalties. For the fiscal years ended
March 26, 2017,
March 27, 2016
and
March 29, 2015
Nathan’s recognized interest and penalties in the amounts of
$29,
$34
and
$44,
respectively. The Company believes that it is reasonably possible that decreases in unrecognized tax benefits of up to
$5
may
be recorded within the next year.
 
In
June 2016,
Nathan’s received notification from the Internal Revenue Service that it was seeking to review Nathan’s federal tax return for the period
April 1, 2014
through
March 31, 2015.
The income tax examination has been completed with
no
changes to the original return as filed.
 
In
May 2014,
Nathan’s received notification from the Internal Revenue Service that it is seeking to review its tax return for the year ended
March 31, 2013.
The income tax examination has been completed with
no
changes to the original return as filed.
 
In
June 2015,
Nathan’s received notification from the New York State Department of Taxation and Finance that it will review Nathan’s tax returns for the period
April 1, 2011
through
March 31, 2014.
The income tax examination has been completed with
no
changes to the original return as filed.
 
The earliest tax years’ that are subject to examination by taxing authorities by major jurisdictions are as follows:
 
Jurisdiction
Fiscal Year
Federal
2014
New York State
2014
New York City
2014
New Jersey
2013
Pennsylvania
2014