Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 28, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income tax expense are as follows:
Fiscal Year Ended
in thousands
December 28,
2023		 December 29,
2022		 December 30,
2021
Current expense:
Federal
 $ 29,737  $ 73,463  $ 37,869 
State
 12,092  16,489  9,927 
Total current expense 41,829  89,952  47,796 
Deferred expense (benefit):
Federal
 24,792  (78) 4,853 
State
 (1,070) (2,447) (1,811)
Total deferred expense (benefit)
23,722  (2,525) 3,042 
Income tax expense
 $ 65,551  $ 87,427  $ 50,838 
The following is a summary of the differences between the total income tax expense as shown on the financial statements and the income tax expense that would result from applying the federal statutory tax rate of 21% for the fiscal years ended December 28, 2023, December 29, 2022, and December 30, 2021 to income before income taxes:
Fiscal Year Ended
in thousands
December 28,
2023		 December 29,
2022		 December 30,
2021
Computed “expected” income tax expense at statutory rate
 $ 65,421  $ 80,984  $ 70,154 
State income taxes, net of federal income tax benefit (1)
8,824  11,744  6,186 
Permanent differences:
Excess tax benefit related to stock-based compensation awards (8,748) (3,762) (25,710)
Other 1,714  874  908 
Total permanent differences (7,034) (2,888) (24,802)
Provision to return 578  183  (34)
Federal tax credits (2,019) (1,535) (1,471)
Uncertain tax positions —  (848) 308 
Other, net (219) (213) 497 
Income tax expense
 $ 65,551  $ 87,427  $ 50,838 
(1)     Includes state excess tax benefits related to stock-based compensation awards for fiscal years 2023, 2022, and 2021 of $1.8 million, $0.8 million, and $4.6 million, respectively.
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and (liabilities) are presented below:
Fiscal Year Ended
in thousands December 28,
2023		 December 29,
2022
Deferred tax assets:
Lease liabilities $ 362,958  $ 339,972 
Accruals not currently deductible for tax purposes 20,072  16,014 
Inventories 10,596  10,337 
Stock-based compensation 10,039  11,320 
Other intangibles 6,289  4,187 
Gift card liability 3,109  3,206 
Other
 2,918  2,608 
Total deferred tax assets 415,981  387,644 
Deferred tax liabilities:
Right-of-use assets (322,033) (302,008)
Fixed assets (113,130) (85,621)
Intangible assets (27,493) (27,430)
Other (6,286) (2,840)
Total deferred tax liabilities (468,942) (417,899)
Net deferred tax liabilities $ (52,961) $ (30,255)
The Company utilized no tax-effected state net operating losses in fiscal 2023, and $1.3 million of tax-effected state net operating losses in fiscal 2022. As of December 28, 2023, approximately $0.7 million of tax-effected state net operating losses were available to reduce future income taxes. The state net operating losses expire in various amounts beginning in fiscal 2032.
In assessing the realization of deferred tax assets, including net operating losses, management considered whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers taxable income in prior carryback periods, future reversals of existing taxable temporary differences, tax planning strategies, and future taxable income exclusive of reversing temporary differences and carryforwards in making this assessment, and accordingly, has concluded that no valuation allowance is necessary as of December 28, 2023 or December 29, 2022.
The Company files income tax returns with the U.S. Federal government and various state jurisdictions. Prior tax years beginning in year 2020 remain open to examination by the Internal Revenue Service (“IRS”). Foreign, state, and local income tax returns are generally subject to examination for a period of three to five years after filing of the respective returns.
There was no unrecognized tax benefit activity in fiscal 2023. The following is a reconciliation of the beginning and ending balance of unrecognized tax benefits for fiscal years 2022 and 2021:
Fiscal Year Ended
in thousands December 29,
2022		 December 30,
2021
Unrecognized tax benefits balance at beginning of fiscal year $ 1,073  $ 6,107 
Additions based on tax positions related to the current year —  390 
Reductions due to settlements —  (5,424)
Reductions for tax positions of prior years (1,073) — 
Unrecognized tax benefits balance at end of fiscal year $ —  $ 1,073 
As of December 28, 2023 and December 29, 2022, there were no unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate. The Company's policy is to classify interest and penalties related to unrecognized tax benefits in income tax expense. The Company recognized no interest expense related to unrecognized tax benefits during fiscal years 2023, 2022, or 2021.