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Provision For Income Taxes
 12 Months Ended
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,
 
202320222021
Current:
Federal$167,954 $100,525 $11,338 
State15,011 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,
 
202320222021
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 allowance5,770 7,162 2,883 
Research credits(23,714)(14,130)(6,263)
Stock-based compensation1,066 (2,864)(11,831)
Non-deductible executive compensation7,019 4,549 11,182 
Branded prescription drug fee4,968 3,855 2,897 
Non-deductible warrant purchase— 6,300 — 
Other2,054 617 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,
 
20232022
Deferred tax assets:
Net operating loss carryforwards$29,512 $33,635 
Tax credit carryforwards39,640 40,217 
Depreciation and amortization313,679 176,208 
Stock-based compensation24,592 27,531 
Lease liabilities49,971 46,759 
Accruals and reserves not currently deductible30,068 22,418 
Other assets10,730 14,402 
Total deferred tax assets498,192 361,170 
Valuation allowance(83,001)(77,230)
Net deferred tax assets415,191 283,940 
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,
 
202320222021
Beginning balance$87,706 $83,583 $80,941 
Change relating to prior year provision631 715 728 
Change relating to current year provision32,137 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.