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Provision For Income Taxes | 12 Months Ended
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Dec. 29, 2023
Income Tax Disclosure [Abstract] |
PROVISION FOR INCOME TAXES | PROVISION FOR INCOME TAXES Our income before income taxes is derived solely from within the U.S. Our provision for income taxes was as follows (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |
Federal | $ | 167,954 |  |  | $ | 100,525 |  |  | $ | 11,338 |
State | 15,011 |  |  | 11,903 |  |  | 5,224 |
Total current tax expense | $ | 182,965 |  |  | $ | 112,428 |  |  | $ | 16,562 |
Deferred: |  |  |  |  |
Federal | $ | (123,486) |  |  | $ | (54,223) |  |  | $ | 46,416 |
State | (9,723) |  |  | (6,135) |  |  | 113 |
Total deferred tax (benefit) expense | (133,209) |  |  | (60,358) |  |  | 46,529 |
Provision for income taxes | $ | 49,756 |  |  | $ | 52,070 |  |  | $ | 63,091 |
The provision for income taxes for the years ended December 31, 2023, 2022 and 2021 primarily relates to the generation of federal tax attributes and state taxes in jurisdictions outside of California. The reconciliation of the U.S. federal income tax provision at the statutory federal income tax rate of 21% for each of the years ended December 31, 2023, 2022 and 2021, respectively, to our provision for income taxes was as follows (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
U.S. federal income tax provision at statutory rate | $ | 54,080 |  |  | $ | 49,213 |  |  | $ | 61,772 |
State tax (benefit) expense | (1,487) |  |  | (2,632) |  |  | 1,336 |
Change in valuation allowance | 5,770 |  |  | 7,162 |  |  | 2,883 |
Research credits | (23,714) |  |  | (14,130) |  |  | (6,263) |
Stock-based compensation | 1,066 |  |  | (2,864) |  |  | (11,831) |
Non-deductible executive compensation | 7,019 |  |  | 4,549 |  |  | 11,182 |
Branded prescription drug fee | 4,968 |  |  | 3,855 |  |  | 2,897 |
Non-deductible warrant purchase | — |  |  | 6,300 |  |  | — |
Other | 2,054 |  |  | 617 |  |  | 1,115 |
Provision for income taxes | $ | 49,756 |  |  | $ | 52,070 |  |  | $ | 63,091 |
Deferred tax assets and liabilities reflect the net tax effects of net operating loss and tax credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. Our deferred tax assets and liabilities were as follows (in thousands):
| December 31,
| 2023 |  | 2022
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 29,512 |  |  | $ | 33,635 |
Tax credit carryforwards | 39,640 |  |  | 40,217 |
Depreciation and amortization | 313,679 |  |  | 176,208 |
Stock-based compensation | 24,592 |  |  | 27,531 |
Lease liabilities | 49,971 |  |  | 46,759 |
Accruals and reserves not currently deductible | 30,068 |  |  | 22,418 |
Other assets | 10,730 |  |  | 14,402 |
Total deferred tax assets | 498,192 |  |  | 361,170 |
Valuation allowance | (83,001) |  |  | (77,230) |
Net deferred tax assets | 415,191 |  |  | 283,940 |
Deferred tax liabilities: |  |  |
Lease right-of-use assets | (54,046) |  |  | (52,830) |
Net deferred taxes | $ | 361,145 |  |  | $ | 231,110 |
As of December 31, 2023, based on the evaluation and weighting of both positive and negative evidence, including our achievement of a cumulative three-year income position as of December 31, 2023 and forecasts of future operating results, as well as considering the utilization of net operating losses and tax credits prior to their expiration, management has continued to determine that there is sufficient positive evidence to conclude that it is more likely than not the deferred tax assets are realizable. As of December 31, 2023 and 2022, we continue to carry a valuation allowance of $83.0 million and $77.2 million, respectively, against our California state deferred tax assets. The valuation allowance increased by $5.8 million and $7.2 million during the years ended December 31, 2023 and 2022, respectively. At December 31, 2023, we had state net operating loss carryforwards of approximately $367 million, which expire in the years 2025 through 2036, and California research and development tax credits of approximately $54 million, which do not expire. Under the Internal Revenue Code and similar state provisions, certain substantial changes in our ownership could result in an annual limitation on the amount of net operating loss and credit carryforwards that can be utilized in future years to offset future taxable income. The annual limitation may result in the expiration of net operating losses and credit carryforwards before utilization. We completed a Section 382 analysis through December 31, 2023, and concluded that an ownership change, as defined under Section 382, had not occurred. The following table summarizes the activity related to our unrecognized tax benefits (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Beginning balance | $ | 87,706 |  |  | $ | 83,583 |  |  | $ | 80,941 |
Change relating to prior year provision | 631 |  |  | 715 |  |  | 728 |
Change relating to current year provision | 32,137 |  |  | 4,129 |  |  | 2,215 |
Reductions based on the lapse of the applicable statutes of limitations | (4,708) |  |  | (721) |  |  | (301) |
Ending balance | $ | 115,766 |  |  | $ | 87,706 |  |  | $ | 83,583 |
We do not anticipate that the amount of unrecognized tax benefits existing as of December 31, 2023 will significantly change over the next 12 months. As of December 31, 2023, we had $115.8 million in unrecognized tax benefits, of which $58.7 million would reduce our income tax provision and effective tax rate, if recognized. Interest and penalties were nominal or zero for all periods presented. We have elected to record interest and penalties in the accompanying Consolidated Statements of Income as a component of income taxes. We file U.S. and state income tax returns in jurisdictions with varying statues of limitations during which such tax returns may be audited and adjusted by the relevant tax authorities. The 2002 through 2023 tax years generally remain subject to examination by federal and most state tax authorities to the extent net operating losses and credits generated during these periods are being utilized in the open tax periods.

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