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Income Taxes

12 Months Ended

Dec. 31, 2019

(9) Income Taxes

Components of our income tax provision for the years ended December 31, 2019, December 25, 2018 and December 26, 2017 are as follows:


	Fiscal Year Ended
	December 31, 2019		December 25, 2018		December 26, 2017
Current:
Federal	$	15,643	$	2,934	$	43,108
State		10,050		8,794		10,233
Foreign		369		210		309
Total current		26,062		11,938		53,650
Deferred:
Federal		4,396		11,909		(4,830)
State		1,939		410		(239)
Total deferred		6,335		12,319		(5,069)
Income tax provision	$	32,397	$	24,257	$	48,581

Our pre-tax income is substantially derived from domestic restaurants.

A reconciliation of the statutory federal income tax rate to our effective tax rate for December 31, 2019, December 25, 2018 and December 26, 2017 is as follows:


	Fiscal Year Ended
	December 31, 2019		December 25, 2018		December 26, 2017
Tax at statutory federal rate	21.0	%	21.0	%	35.0	%
State and local tax, net of federal benefit	3.8		3.6		3.3
FICA tip tax credit	(9.4)		(9.6)		(7.0)
Work opportunity tax credit	(1.5)		(1.5)		(0.9)
Stock compensation	(0.1)		(1.4)		(1.8)
Net income attributable to noncontrolling interests	(0.6)		(0.8)		(1.1)
Officers compensation	1.2		1.7		0.1
Tax reform	—		—		(1.7)
Other	0.7		(0.1)		0.2
Total	15.1	%	12.9	%	26.1	%

Our effective tax rate increased to 15.1% in 2019 compared to 12.9% in 2018 primarily due to lower excess tax benefits related to our share-based compensation program partially offset by lower non-deductible officer compensation. In addition, the prior year tax rate benefitted from an adjustment related to tax reform that we recorded in conjunction with the filing of our 2017 tax return.

Our effective tax rate decreased to 12.9% in 2018 compared to 26.1% in 2017 primarily due to new tax legislation enacted in late 2017. As a result of the new tax legislation, significant tax changes were enacted including a reduction of the federal corporate tax rate from 35.0% to 21.0% and changes in the federal taxes paid on foreign sourced earnings.

Components of deferred tax liabilities, net are as follows:


	December 31, 2019		December 25, 2018
Deferred tax assets:
Deferred revenue—gift cards	$	16,122	$	12,851
Insurance reserves		4,774		3,949
Other reserves		601		890
Share-based compensation		5,510		4,623
Operating lease liabilities		137,744		—
Deferred rent		—		12,179
Deferred compensation		10,503		8,483
Tax credit carryforwards		1,710		—
Other assets		2,482		2,212
Total deferred tax asset		179,446		45,187
Deferred tax liabilities:
Property and equipment		(63,777)		(50,513)
Goodwill and intangibles		(6,241)		(5,398)
Operating lease right-of-use asset		(123,813)		—
Other liabilities		(8,310)		(6,544)
Total deferred tax liability		(202,141)		(62,455)
Net deferred tax liability	$	(22,695)	$	(17,268)

As of December 31, 2019, we have federal tax credit carryforwards of $1.5 million expiring in 2038 and state tax credit carryforwards of $0.2 million expiring in 2023.

We have not provided any valuation allowance as we believe the realization of our deferred tax assets is more likely than not.

A reconciliation of the beginning and ending liability for unrecognized tax benefits, all of which would impact the effective tax rate if recognized, is as follows:


Balance at December 26, 2017	$	806
Additions to tax positions related to prior years		36
Additions to tax positions related to current year		754
Reductions due to statute expiration		(114)
Reductions due to exam settlements		—
Balance at December 25, 2018		1,482
Additions to tax positions related to prior years		16
Additions to tax positions related to current year		362
Reductions due to statute expiration		(314)
Reductions due to exam settlement		—
Balance at December 31, 2019	$	1,546

As of December 31, 2019 and December 25, 2018, the total amount of accrued penalties and interest related to uncertain tax provisions was not material.

All entities for which unrecognized tax benefits exist as of December 31, 2019 possess a December tax year-end. As a result, as of December 31, 2019, the tax years ended December 27, 2016, December 26, 2017 and December 25, 2018 remain subject to examination by all tax jurisdictions. As of December 31, 2019, no audits were in process by a tax jurisdiction that, if completed during the next twelve months, would be expected to result in a material change to our unrecognized tax benefits. Additionally, as of December 31, 2019, no event occurred that is likely to result in a significant increase or decrease in the unrecognized tax benefits through December 29, 2020.