INCOME TAXES |
6 Months Ended |
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Jul. 04, 2015 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes |
INCOME TAXES
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company is no longer subject to U.S. federal or state income tax examinations for years before 2011. The Company completed its 2012 and 2013 federal income tax return examination by the Internal Revenue Service during the second quarter of 2015 without a material financial statement effect.
The Company recorded an effective tax rate of 22% and 26% for the three and six month periods ended July 4, 2015, respectively, as the Company experienced non-taxable gains associated with an earn-out adjustment made during the first quarter of 2015 combined with life insurance proceeds received in excess of cash surrender value for a former officer of the Company. The effective tax rates for the three and six months of the prior year were 26% and 28%, respectively. A non-taxable earn-out adjustment was also made in the prior year. The higher rate in the prior year resulted from the Company using a 35% Federal Income Tax rate for 2014 based upon projected 2014 taxable income from continuing operations. A 34% rate was used in 2015.
The Company had $1,438,000 and $1,504,000 accrued for unrecognized tax benefits at July 4, 2015 and January 3, 2015, respectively. The decrease in the liability during the first six months of 2014 resulted from the settlement of the 2012 / 2013 Federal Income Tax Audit. The Company expects to eliminate the remaining balance of $1,438,000 for unrecognized tax benefits during 2015 when all of the necessary filings for method changes are completed and approved by the Internal Revenue Service. The Company's continuing practice is to recognize interest and/or penalties related to income tax matters in the provision for income tax.
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