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Income Taxes (Tables) | 12 Months Ended
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Oct. 02, 2020
Income Tax Disclosure [Abstract] |
Income from continuing operations before income taxes by source of income | The components of (loss) income before income taxes by source of (loss) income are as follows (in thousands):
|  | Fiscal Year Ended
|  | October 2, 2020 |  | September 27, 2019 |  | September 28, 2018
United States |  | $ | (291,436) |  |  | $ | 418,902 |  |  | $ | 326,277 |
Non-U.S. |  | (356,283) |  |  | 137,270 |  |  | 145,599 |
|  | $ | (647,719) |  |  | $ | 556,172 |  |  | $ | 471,876 |
Provision (benefit) for income taxes | The (benefit) provision for income taxes consists of (in thousands):
|  | Fiscal Year Ended
|  | October 2, 2020 |  | September 27, 2019 |  | September 28, 2018
Current: |  |  |  |  |  |
Federal |  | $ | (69,399) |  |  | $ | 8,781 |  |  | $ | (48,249) |
State and local |  | (4,616) |  |  | 19,966 |  |  | 11,356 |
Non-U.S. |  | 21,779 |  |  | 38,456 |  |  | 44,618 |
|  | (52,236) |  |  | 67,203 |  |  | 7,725 |
Deferred: |  |  |  |  |  |
Federal |  | (79,054) |  |  | 35,251 |  |  | (113,475) |
State and local |  | (19,627) |  |  | 7,683 |  |  | 7,408 |
Non-U.S. |  | (35,367) |  |  | (2,431) |  |  | 1,778 |
|  | (134,048) |  |  | 40,503 |  |  | (104,289) |
|  | $ | (186,284) |  |  | $ | 107,706 |  |  | $ | (96,564) |
Effective Income Tax Rate Reconciliation | The (benefit) provision for income taxes varies from the amount determined by applying the United States Federal statutory rate to pretax (loss) income as a result of the following (all percentages are as a percentage of (loss) income before income taxes):
|  | Fiscal Year Ended
|  | October 2, 2020 |  | September 27, 2019 |  | September 28, 2018
United States statutory income tax rate |  | 21.0 | % |  | 21.0 | % |  | 24.5 | %
Increase (decrease) in taxes, resulting from: |  |  |  |  |  |
State income taxes, net of Federal tax benefit |  | 3.0 |  |  | 4.2 |  |  | 3.2 |
Foreign taxes(1) |  | (3.9) |  |  | 2.2 |  |  | 3.3 |
Foreign goodwill impairment |  | (5.0) |  |  | — |  |  | — |
Permanent book/tax differences |  | (0.7) |  |  | 0.6 |  |  | (1.2) |
Uncertain tax positions |  | 0.1 |  |  | — |  |  | (0.3) |
U.S. Tax Reform - Remeasurement of deferred taxes |  | — |  |  | — |  |  | (49.3) |
U.S. Tax Reform - Foreign tax credit valuation allowance |  | — |  |  | (2.3) |  |  | 2.8 |
Stock compensation |  | 3.6 |  |  | (0.2) |  |  | — |
CARES Act - Carryback rate differential |  | 9.8 |  |  | — |  |  | — |
Sale of HCT |  | — |  |  | (4.4) |  |  | — |
Tax credits & other |  | 0.9 |  |  | (1.7) |  |  | (3.5) |
Effective income tax rate |  | 28.8 | % |  | 19.4 | % |  | (20.5) | %
(1) | Includes differences between the United States statutory tax rate and tax rates in foreign jurisdictions, foreign withholding taxes and taxation of foreign earnings, which includes the transition tax on deemed repatriated earnings of foreign subsidiaries and the tax on "Global Intangible Low-Taxed Income" ("GILTI"), as well as valuation allowances in foreign countries in fiscal 2020 (3.4%).
Components of deferred taxes | As of October 2, 2020 and September 27, 2019, the components of deferred taxes are as follows (in thousands):
|  | October 2, 2020 |  | September 27, 2019
Deferred tax liabilities: |  |  |  |
Property and equipment |  | $ | 183,789 |  |  | $ | 137,293 |
Investments |  | 13,300 |  |  | 11,902 |
Other intangible assets, including goodwill |  | 500,447 |  |  | 462,637 |
Cost to fulfill - Rental merchandise in-service |  | 52,334 |  |  | 83,483 |
Operating Lease Right-of-use Assets |  | 89,464 |  |  | — |
Other |  | 45,589 |  |  | 37,309 |
Gross deferred tax liability |  | 884,923 |  |  | 732,624 |
Deferred tax assets: |  |  |  |
Derivatives |  | 30,625 |  |  | 11,949 |
Insurance |  | 23,784 |  |  | 34,112 |
Employee compensation and benefits |  | 128,771 |  |  | 113,269 |
Accruals and allowances |  | 31,218 |  |  | 31,844 |
Operating lease liabilities |  | 102,259 |  |  | — |
NOL/credit carryforwards and other |  | 261,763 |  |  | 56,508 |
Gross deferred tax asset, before valuation allowances |  | 578,420 |  |  | 247,682 |
Valuation allowances |  | (38,977) |  |  | (17,532) |
Net deferred tax liability |  | $ | 345,480 |  |  | $ | 502,474 |
Schedule of Valuation and Qualifying Accounts Disclosure | Rollforward of the valuation allowance is as follows:
|  | October 2, 2020 |  | September 27, 2019
Balance, beginning of year |  | $ | (17,532) |  |  | $ | (29,023) |
Additions(1) |  | (21,445) |  |  | (2,330) |
Subtractions(2) |  | — |  |  | 13,821 |
Balance, end of year |  | $ | (38,977) |  |  | $ | (17,532) |
(1) | The additions in both fiscal 2020 and fiscal 2019 were mainly driven by losses in certain foreign subsidiaries.
(2) | Valuation allowances against FTC carryforwards were released during fiscal 2019 as a result of Treasury Regulations.
ARAMARK AND SUBSIDIARIES SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE FISCAL YEARS ENDED OCTOBER 2, 2020, SEPTEMBER 27, 2019 AND SEPTEMBER 28, 2018
|  |  |  | Additions |  | Reductions |  |
|  | Balance, Beginning of Period |  | Charged to Income |  | Deductions from Reserves(1) |  | Balance, End of Period
Description |  |  |  |  |  |  |  |
Fiscal Year 2020 |  |  |  |  |  |  |  |
Reserve for doubtful accounts, advances & current notes receivable |  | $ | 49,566 |  |  | $ | 64,655 |  |  | $ | 39,296 |  |  | $ | 74,925 |
Fiscal Year 2019 |  |  |  |  |  |  |  |
Reserve for doubtful accounts, advances & current notes receivable |  | $ | 52,682 |  |  | $ | 21,821 |  |  | $ | 24,937 |  |  | $ | 49,566 |
Fiscal Year 2018 |  |  |  |  |  |  |  |
Reserve for doubtful accounts, advances & current notes receivable |  | $ | 53,416 |  |  | $ | 22,009 |  |  | $ | 22,743 |  |  | $ | 52,682 |
(1) | Amounts determined not to be collectible and charged against the reserve and translation.
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | A reconciliation of the beginning and ending amount of gross unrecognized tax benefits follows (in thousands):
| October 2, 2020 |  | September 27, 2019
Balance, beginning of year | $ | 36,272 |  |  | $ | 29,089 |
Additions based on tax positions taken in the current year | 1,257 |  |  | 3,713 |
Additions for tax positions taken in prior years | — |  |  | 6,531 |
Reductions for remeasurements, settlements and payments | (392) |  |  | (1,484) |
Reductions due to statute expiration | (2,559) |  |  | (1,577) |
Balance, end of year | $ | 34,578 |  |  | $ | 36,272 |

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