Note 14 — Income Taxes

The income tax provisions as of September 27, 2015 and September 28, 2014 include the following: 

The income tax provision for Optex Systems as of September 27, 2015 differs from those computed using the statutory federal tax rate of 34%, due to the following permanent differences:

Deferred income taxes recorded in the balance sheets results from differences between financial statement and tax reporting of income and deductions.  A summary of the composition of the deferred income tax assets (liabilities) follows:

As of September 27, 2015, the Company has a net operating loss carryforward of $6,049 thousand as compared to net loss carryforwards of $4,263 thousand available as of September 28, 2014.

As of September 28, 2014 management assessed the recoverability of deferred tax assets and determined due to recent and projected loss conditions and the continued downturn in the defense budget spending, that the balance of deferred tax assets may not be realized and increased the valuation allowance reserves by $1.1million during 2014. The valuation allowance reserve was increased by an additional $539 thousand during the twelve months ended September 27, 2015, consistent with the 2015 change in deferred tax assets. As of September 27, 2015 Optex Systems Inc. has a deferred tax asset valuation allowance of ($4.6) million against a deferred tax asset of $4.6 million. 

As the result of the application of the FASB ASC 740-10, Optex Systems Holdings has no unrecognized tax benefits. By statute, the tax years ending in September 27, 2015, September 28, 2014 and September 29, 2013 are open to examination by the major taxing jurisdictions to which the Optex Systems Holdings is subject.

There were no income taxes paid during the fiscal years ended September 27, 2015 or September 28, 2014.