Note 11 - Income Taxes

12 Months Ended

Sep. 24, 2022

(11) Income Taxes

The income tax expense (benefit) is different from what would be obtained by applying the statutory federal income tax rate to income (loss) before income taxes due to the following:

	September 24, 2022						September 25, 2021
	Amount			Percent			Amount			Percent
Tax expense (benefit) at U.S. statutory rate	$	(489,072	)		(21.0	)%	$	(228,561	)		(21.0	)%
State income tax provision, net of federal benefit		(125,112	)		(5.4	)%		(104,451	)		(9.6	)%
Federal research credits		-			-			-			-
Change in state income tax rate		(32,518	)		(1.4	)%		(160,738	)		(14.8	)%
Other		13,241			0.6	%		(105,280	)		(9.6	)%
Valuation allowance		633,461			27.2	%		599,030			55.0	%
Total income tax expense (benefit)	$	-			-		$	-			-

Deferred income taxes consist of the following:

	September 24, 2022			September 25, 2021
Inventory differences	$	1,054,281		$	1,046,749
Net operating losses		3,407,197			2,789,142
Stock based compensation		138,736			133,173
Tax credits		539,421			516,542
Other		49,617			70,168
Total		5,189,252			4,555,791
Less: valuation allowance		(5,189,252	)		(4,555,791	)
Total	$	-		$	-

During fiscal year 2014, the Company established a valuation allowance against deferred tax assets. The valuation allowance is related to uncertainty with respect to the Company’s ability to realize its deferred tax assets. Deferred tax assets consist of net operating loss carryforwards, tax credits, inventory differences and other temporary differences. During fiscal years 2022 and 2021, the change in the valuation allowance was $633,461 and $599,030, respectively and related primarily to changes in net operating losses.

Due to the nature of the Company’s current operations in foreign countries (selling products into these countries with the assistance of local representatives), the Company has not been subject to any foreign taxes in recent years. Also, it is not anticipated that the Company will be subject to foreign taxes in the near future.

The Company files income tax returns in the U.S. federal jurisdiction and in the states of Massachusetts and New Hampshire. For U.S. federal and state purposes, the tax years 2018 through 2021 remain open to examination. In addition, the amount of the Company’s federal and state net operating loss carryforwards utilized in prior periods may be subject to examination and adjustment. The Company has federal research credits of $365,897 available through fiscal year 2040 and net operating loss carryforwards of $5,859,642 available through fiscal year 2039 and the net operating loss carryforwards generated in fiscal years 2022 through 2019 of $7,276,985 will carryforward indefinitely. In addition, the Company has Massachusetts research credits of $189,318 available through fiscal year 2036 and net operating loss carryforwards of $11,633,242 available through fiscal year 2041.

Under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) the Company is entitled to Employee Retention Credits for parts of its fiscal 2020 and 2021 years. The Company has filed amended Employer’s Quarterly Federal Tax returns to apply for these credits. As a result the Company is due $515,966 in credits and expects to receive refunds from the IRS in fiscal 2023.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

TECHNICAL COMMUNICATIONS CORP 10-K