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Income Taxes

12 Months Ended

Dec. 28, 2021

Income Taxes

Income Taxes

(9) Income Taxes

Components of our income tax expense (benefit) for the years ended December 28, 2021, December 29, 2020 and December 31, 2019 are as follows:

​

​	​	​	​	​	​	​	​	​	​	​
​	​	Fiscal Year Ended
​		December 28, 2021			December 29, 2020			December 31, 2019
Current:	​	​	​	​	​	​	​	​	​	​
Federal	​	$	16,700	​	$	(648)	​	$	15,643	​
State	​		13,539	​		4,505	​		10,050	​
Foreign	​	​	443	​	​	403	​	​	369	​
Total current	​		30,682	​		4,260	​		26,062	​
Deferred:	​	​	​	​	​	​	​	​	​	​
Federal	​		7,391	​	​	(16,859)	​		4,396	​
State	​		1,505	​	​	(3,073)	​		1,939	​
Total deferred	​		8,896	​		(19,932)	​		6,335	​
Income tax expense (benefit)	​	$	39,578	​	$	(15,672)	​	$	32,397	​

​

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 28, 2021, December 29, 2020 and December 31, 2019 is as follows:

​

​	​	​	​	​	​	​	​	​
​	​	​	Fiscal Year Ended					​
​	​	​	December 28, 2021	​	December 29, 2020	​	December 31, 2019	​
Tax at statutory federal rate	​	​	21.0	%	21.0	%	21.0	%
State and local tax, net of federal benefit	​	​	3.8	​	3.6	​	3.8	​
FICA tip tax credit	​	​	(9.3)	​	(92.5)	​	(9.4)	​
Work opportunity tax credit	​	​	(1.2)	​	(12.4)	​	(1.5)	​
Stock compensation	​	​	(1.5)	​	(2.3)	​	(0.1)	​
Net income attributable to noncontrolling interests	​	​	(0.5)	​	(3.0)	​	(0.6)	​
Officers compensation	​	​	1.1	​	2.6	​	1.2	​
Other	​	​	0.1	​	1.6	​	0.7	​
Total	​	​	13.5	%	(81.4)	%	15.1	%

​

Our effective tax rate increased to 13.5% compared to an effective tax rate benefit of 81.4% in 2020. The increase was primarily due to the significant increase in pre-tax income. In 2020, our FICA tip and Work opportunity tax credits exceeded our federal tax liability which resulted in a tax rate benefit.

Our effective tax rate was a benefit 81.4% in 2020 compared to expense of 15.1% in 2019. This was primarily due to the impact of FICA tip and Work opportunity tax credits on lower pre-tax income. Although these credits exceeded our federal tax liability in 2020, we expect to utilize these credits in future years.

Components of deferred tax liabilities, net are as follows:

​

​	​	​	​	​	​	​	​
​		December 28, 2021			December 29, 2020
Deferred tax assets:	​	​	​	​	​	​	​
Deferred revenue—gift cards	​	$	24,056	​	$	26,692	​
Insurance reserves	​	​	6,407	​	​	5,998	​
Deferred payroll taxes	​	​	5,995	​	​	5,995	​
Other reserves	​		1,077	​		705	​
Share-based compensation	​		6,040	​		5,621	​
Operating lease liabilities	​	​	160,638	​	​	146,803	​
Deferred compensation	​		16,233	​		12,778	​
Tax credit carryforwards	​	​	3,618	​	​	10,360	​
Other assets	​		2,801	​		2,119	​
Total deferred tax asset	​		226,865	​		217,071	​
Deferred tax liabilities:	​	​	​	​	​	​	​
Property and equipment	​		(75,022)	​		(71,263)	​
Goodwill and intangibles	​		(7,742)	​		(6,896)	​
Operating lease right-of-use asset	​	​	(144,153)	​	​	(131,718)	​
Other liabilities	​	​	(11,682)	​	​	(9,996)	​
Total deferred tax liability	​		(238,599)	​		(219,873)	​
Net deferred tax liability	​	$	(11,734)	​	$	(2,802)	​

​

As of December 28, 2021 and December 29, 2020, we had tax credit carryforwards of $3.6 million and $10.4 million, respectively, primarily related to FICA tip and Work opportunity tax credit carryforwards that exceeded credit limitations. These federal carryforwards expire in 2041. We expect to generate sufficient earnings in future periods and/or may implement tax planning strategies that would allow us to fully utilize these credits. As such, we have not

provided any valuation allowances for these credits, or any of our other deferred tax assets, as their realization 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 31, 2019	​	$	1,546	​
Additions to tax positions related to prior years	​		148	​
Additions to tax positions related to current year	​	​	389	​
Reductions due to statute expiration	​	​	(421)	​
Reductions due to exam settlements	​		—	​
Balance at December 29, 2020	​		1,662	​
Additions to tax positions related to prior years	​	​	49	​
Additions to tax positions related to current year	​		413	​
Reductions due to statute expiration	​		(160)	​
Reductions due to exam settlement	​	​	(436)	​
Balance at December 28, 2021	​	$	1,528	​

​

As of December 28, 2021 and December 29, 2020, the total amount of accrued penalties and interest related to uncertain tax provisions was recognized as a part of income tax expense and these amounts were not material.

All entities for which unrecognized tax benefits exist as of December 28, 2021 possess a December tax year-end. As a result, as of December 28, 2021, the tax years ended December 29, 2020, December 31, 2019 and December 25, 2018 remain subject to examination by all tax jurisdictions. As of December 28, 2021, 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 28, 2021, no event occurred that is likely to result in a significant increase or decrease in the unrecognized tax benefits through December 27, 2022.

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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.

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