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Income Taxes | 12 Months Ended
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Jan. 01, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Note 7: Income Taxes Income before income taxes includes income from foreign operations of $10,092,000, $8,017,000 and $8,005,000 for 2020, 2019 and 2018, respectively. Total income tax expense for 2020, 2019 and 2018 consisted of the following:
|  | Fiscal Years |
(In thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 11,553 |  |  | $ | 16,498 |  |  | $ | 16,487 |
Foreign |  |  | 1,873 |  |  |  | 1,523 |  |  |  | 1,624 |
State |  |  | 4,597 |  |  |  | 6,554 |  |  |  | 6,667 |
|  |  | 18,023 |  |  |  | 24,575 |  |  |  | 24,778 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (2,766 | ) |  |  | (1,727 | ) |  |  | (2,604 | )
State |  |  | (873 | ) |  |  | (1,118 | ) |  |  | (1,111 | )
|  |  | (3,639 | ) |  |  | (2,845 | ) |  |  | (3,715 | )
Total |  | $ | 14,384 |  |  | $ | 21,730 |  |  | $ | 21,063 |
The Company’s effective tax rate differs from the statutory federal tax rate of 21% as shown in the following schedule:
|  | Fiscal Years |
(In thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Tax at federal statutory rate |  | $ | 20,357 |  |  | $ | 21,880 |  |  | $ | 19,597 |
State taxes, net of federal benefit |  |  | 2,942 |  |  |  | 4,129 |  |  |  | 4,391 |
Divestiture of foreign subsidiary |  |  | 46 |  |  |  | 956 |  |  |  | — |
Nondeductible officer compensation |  |  | 907 |  |  |  | 759 |  |  |  | — |
Non-deductible expenses |  |  | 118 |  |  |  | 345 |  |  |  | 335 |
Non-deductible stock-based compensation |  |  | (14 | ) |  |  | 2 |  |  |  | 20 |
Excess tax benefit from equity incentive plans |  |  | (9,725 | ) |  |  | (6,394 | ) |  |  | (3,310 | )
Difference between statutory rate and foreign effective tax rate |  |  | (486 | ) |  |  | (341 | ) |  |  | (217 | )
Other |  |  | 239 |  |  |  | 394 |  |  |  | 247 |
Tax expense |  | $ | 14,384 |  |  | $ | 21,730 |  |  | $ | 21,063 |
Effective tax rate |  |  | 14.8 | % |  |  | 20.9 | % |  |  | 22.6 | %
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at January 1, 2021 and January 3, 2020 are presented in the following schedule:
|  | Fiscal Years |
(In thousands) |  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued liabilities and allowances |  | $ | 16,841 |  |  | $ | 15,658 |
Deferred compensation plan |  |  | 31,619 |  |  |  | 28,463 |
Operating leases |  |  | 5,758 |  |  |  | 6,867 |
Total deferred tax assets |  | $ | 54,218 |  |  | $ | 50,988 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
State taxes |  | $ | (1,969 | ) |  | $ | (1,624 | )
Deductible goodwill |  |  | (2,091 | ) |  |  | (2,104 | )
Operating leases |  |  | (5,758 | ) |  |  | (6,867 | )
Property, equipment and leasehold improvements |  |  | (81 | ) |  |  | (84 | )
Unrealized gain of deferred compensation plan assets |  |  | (3,545 | ) |  |  | (2,339 | )
Divestiture of foreign subsidiary |  |  | — |  |  |  | (956 | )
Other |  |  | (235 | ) |  |  | (193 | )
Total deferred tax liabilities |  |  | (13,679 | ) |  |  | (14,167 | )
Net deferred tax assets |  | $ | 40,539 |  |  | $ | 36,821 |
Management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net deferred tax assets. The Company is entitled to a deduction for federal and state tax purposes with respect to employees’ stock award activity. The net deduction in taxes otherwise payable arising from that deduction has been recorded as an income tax benefit. For 2020, 2019 and 2018, the net deduction in tax payable arising from employees’ stock award activity was $12,258,000, $8,067,000 and $4,154,000, respectively. The Company and its subsidiaries file income tax returns in the United States federal jurisdiction, California and various other state and foreign jurisdictions. The Company is no longer subject to United States federal income tax examination for years prior to 201 7. The Company is no longer subject to California franchise tax examinations for years prior to 201 6. The California Franchise Tax Board is currently examining the Company’s 2017 and 2018 returns. With few exceptions, the Company is no longer subject to state and local or non-United States income tax examination by tax authorities for years prior to 201 6. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance at December 28, 2018 |  | $ | 1,748,000 |
Additions based on tax positions related to the current year |  |  | 515,000 |
Reductions due to lapse of statute of limitations |  |  | (340,000 | )
Balance at January 3, 2020 |  | $ | 1,923,000 |
Additions based on tax positions related to the current year |  |  | 275,000 |
Reductions due to lapse of statute of limitations |  |  | (325,000 | )
Balance at January 1, 2021 |  | $ | 1,873,000 |
Unrecognized tax benefits are included in other liabilities in the accompanying balance sheet. To the extent these unrecognized tax benefits are ultimately recognized, they will impact the effective tax rate by $1,514,000 in a future period. There are no uncertain tax positions whose resolution in the next 12 months is expected to materially affect operating results.

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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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