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INCOME TAXES | 12 Months Ended
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Jun. 24, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | Income before provision for income taxes consists of the following:
| Fiscal Years Ended
| June 24, 2020 |  | June 26, 2019 |  | June 27, 2018
Domestic | $ | 5.0 |  |  | $ | 168.1 |  |  | $ | 182.1 |
Foreign | (0.1 | ) |  | 3.7 |  |  | (11.9 | )
Income before income taxes | $ | 4.9 |  |  | $ | 171.8 |  |  | $ | 170.2 |
The provision for income taxes and effective tax rate consists of the following:
| Fiscal Years Ended
| June 24, 2020 |  | June 26, 2019 |  | June 27, 2018
Current income tax (benefit) expenses: |  |  |  |  |
Federal | $ | (32.9 | ) |  | $ | 63.3 |  |  | $ | 28.7 |
State | 4.8 |  |  | 28.8 |  |  | 12.2 |
Foreign | 0.0 |  |  | 0.6 |  |  | 0.0 |
Total current income tax (benefit) expenses | (28.1 | ) |  | 92.7 |  |  | 40.9 |
Deferred income tax (benefit) expenses: |  |  |  |  |
Federal | 8.8 |  |  | (58.5 | ) |  | 6.6 |
State | (0.2 | ) |  | (18.0 | ) |  | 0.1 |
Foreign | 0.0 |  |  | 0.7 |  |  | (3.3 | )
Total deferred income tax (benefit) expenses | 8.6 |  |  | (75.8 | ) |  | 3.4 |
Provision (benefit) for income taxes | $ | (19.5 | ) |  | $ | 16.9 |  |  | $ | 44.3 |
Effective tax rate | (398.0 | )% |  | 9.8 | % |  | 26.0 | %
A reconciliation between the reported provision for income taxes and the amount computed by applying the statutory Federal income tax rate to Provision (benefit) for income taxes is as follows:
| Fiscal Years Ended
| June 24, 2020 |  | June 26, 2019 |  | June 27, 2018
Income tax expense at statutory rate | $ | 1.0 |  |  | $ | 36.1 |  |  | $ | 47.8 |
FICA and other tax credits | (24.8 | ) |  | (28.2 | ) |  | (22.6 | )
State income taxes, net of Federal benefit | 3.6 |  |  | 8.5 |  |  | 8.7 |
Tax reform impact | — |  |  | — |  |  | 8.2 |
Stock based compensation tax shortfall | 0.5 |  |  | 0.5 |  |  | 1.1 |
Other | 0.2 |  |  | 0.0 |  |  | 1.1 |
Provision (benefit) for income taxes | $ | (19.5 | ) |  | $ | 16.9 |  |  | $ | 44.3 |
Our federal statutory tax rate for fiscal 2020 and fiscal 2019 was 21.0%. The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017 with an effective date of January 1, 2018. The enactment date occurred prior to the end of the second quarter of fiscal 2018 and therefore the federal statutory tax rate changes stipulated by the Tax Act were reflected in the second quarter of fiscal 2018. The Tax Act lowered the federal statutory tax rate from 35.0% to 21.0% effective January 1, 2018. For fiscal 2018, our federal statutory tax rate was 28.1%, representing a blended tax rate for the number of days in fiscal 2018 before and after the effective date. In the fiscal year ended June 27, 2018, in accordance with ASC 740, we re-measured our deferred tax accounts as of the enactment date using the new federal statutory tax rate and recognized the change as a discrete item in the Provision for income taxes, the adjustment was $8.2 million. Deferred Tax and Allowances The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows:
| June 24, 2020 |  | June 26, 2019
Deferred income tax assets: |  |  |
Lease liabilities | $ | 313.7 |  |  | $ | 27.5 |
Gift cards | 13.7 |  |  | 12.3 |
Insurance reserves | 12.2 |  |  | 11.5 |
Stock-based compensation | 11.0 |  |  | 9.9 |
Federal credit carryover | 7.3 |  |  | 9.0 |
Net operating losses | 3.2 |  |  | 3.7 |
State credit carryover | 2.8 |  |  | 2.6 |
Restructure charges and impairments | 1.4 |  |  | 3.0 |
Deferred gain on sale leaseback transactions | — |  |  | 68.6 |
Other, net | 10.3 |  |  | 11.2 |
Less: Valuation allowance | (5.6 | ) |  | (5.5 | )
Total deferred income tax assets | 370.0 |  |  | 153.8 |
Deferred income tax liabilities: |  |  |
Lease assets | 275.5 |  |  | 2.2 |
Goodwill and other amortization | 21.6 |  |  | 20.6 |
Depreciation and capitalized interest on property and equipment | 19.8 |  |  | 4.3 |
Prepaid expenses | 14.4 |  |  | 13.6 |
Other, net | 0.5 |  |  | 1.1 |
Total deferred income tax liabilities | 331.8 |  |  | 41.8 |
Deferred income taxes, net | $ | 38.2 |  |  | $ | 112.0 |
Fiscal 2020 Deferred income taxes, net includes the deferred lease assets and liabilities related to the addition of operating lease assets and liabilities from the adoption of ASC 842. Refer to Note 1 - Nature of Operations and Summary of Significant Accounting Policies and Note 4 - Leases for further information on this adoption. As of June 24, 2020, we have deferred tax assets of $4.0 million reflecting the benefit of state loss carryforwards, before federal benefit and valuation allowance, which expire at various dates between fiscal 2021 and fiscal 2039. We have deferred tax assets of $7.3 million of federal and $3.6 million of state tax credits, before federal benefit and valuation allowance, which expire at various dates between fiscal 2024 and fiscal 2035. The recognized deferred tax asset for the state loss carryforwards is $1.0 million and the federal tax credits is $7.3 million. The federal credit carryover is limited by Section 382 of the Internal Revenue Code. The valuation allowance increased by $0.1 million in fiscal 2020 to recognize certain state net operating loss benefits and state tax credits management believes are not more-likely-than-not to be realized. In assessing whether a deferred tax asset will be realized, we consider the likelihood of the realization, and the reversal of existing taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income, as of June 24, 2020, we believe it is more-likely-than-not that we will realize the benefits of the deferred tax assets, net of the existing valuation allowances. CARES Act Impact In the fourth quarter of fiscal 2020, the United States government passed a $2.0 trillion Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) designed primarily to help keep businesses running during and after the pandemic. The CARES Act included provisions for certain deductions and tax credits, filing deadline extensions, filing payment deadlines and making available certain grant money to assist in this pandemic. As of June 24, 2020, this legislation will allow us to:
• | Reduce our fiscal 2020 payroll tax liability by utilizing employee retention credits to assist with employee payroll costs during this outbreak of $7.9 million
• | Amend our 2018 and 2019 U.S. Income Tax Returns in order to claim additional depreciation deductions related to qualified improvement property that will allow us to generate aggregate refunds of $4.6 million, and upon filing our fiscal 2020 U.S. Income Tax Return we anticipate to include a benefit related to the additional depreciation on qualified improvement property of approximately $2.0 million
• | Defer the employer portion of certain payroll taxes, totaling $12.9 million which will be repaid in two equal installments: on December 31, 2021, and December 31, 2022
Unrecognized Tax Benefits A reconciliation of unrecognized tax benefits are as follows:
| June 24, 2020 |  | June 26, 2019
Balance at beginning of year | $ | 3.5 |  |  | $ | 3.9 |
Additions based on tax positions related to the current year | 0.3 |  |  | 0.4 |
Additions based on tax positions related to prior years | — |  |  | — |
Settlements with tax authorities | 0.0 |  |  | (0.1 | )
Expiration of statute of limitations | (0.8 | ) |  | (0.7 | )
Balance at end of year | $ | 3.0 |  |  | $ | 3.5 |
The total amount of unrecognized tax benefits, excluding interest and penalties, that would affect income tax expenses if resolved in our favor was $2.4 million and $2.7 million as of June 24, 2020 and June 26, 2019, respectively. We do not expect any material changes to our liability for uncertain tax positions in the next 12 months. We recognize accrued interest and penalties related to unrecognized tax benefits in Provision (benefit) for income taxes in the Consolidated Statements of Comprehensive Income. As of June 24, 2020, we had $0.3 million ($0.2 million net of a $0.1 million Federal deferred tax benefit) of interest and penalties accrued, compared to $0.3 million ($0.2 million net of a $0.1 million Federal deferred tax benefit) at June 26, 2019. Our income tax returns are subject to examination by taxing authorities in the jurisdictions in which we operate. The periods subject to examination for our federal return are fiscal 2020 to fiscal 2021, and fiscal 2017 to fiscal 2019 for our Canadian returns. State income tax returns are generally subject to examination for a period of three to five years from date return is filed. We have various state income tax returns in the process of examination or settlements. Our federal returns for fiscal 2020 and 2021 are currently under examination through the Internal Revenue Service: Compliance Assurance Process (CAP) program. There are no unrecorded liabilities associated with these examinations.

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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