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Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

17.   Income Taxes

The provision for income taxes consisted of the following (in thousands):

​

​	​	​	​	​	​	​	​	​	​
​	​	Fiscal Year
​		2024			2023			2022
​	​	​	​	​	​	​	​	​	​
Income before income taxes	​	$	171,047	​	$	100,014	​	$	32,892
Income tax provision/(benefit):	​	​	​	​	​	​	​	​	​
Current:	​	​	​	​	​	​	​	​	​
Federal	​	$	10,638	​	$	7,183	​	$	3,520
State	​		9,688	​		7,195	​		4,895
Total current	​		20,326	​		14,378	​		8,415
Deferred:	​	​	​	​	​	​	​	​	​
Federal	​		(7,542)	​		(15,329)	​		(17,733)
State	​		1,480	​		(386)	​		(913)
Total deferred	​		(6,062)	​		(15,715)	​		(18,646)
Total provision/(benefit)	​	$	14,264	​	$	(1,337)	​	$	(10,231)

​

The following reconciles the U.S. federal statutory rate to the effective tax rate:

​

​	​	​	​	​	​	​	​
​		Fiscal Year
​		2024		2023		2022
​	​	​	​	​	​	​	​
U.S. federal statutory rate		21.0	%	21.0	%	21.0	%
State and district income taxes, net of federal benefit		5.0	​	5.4	​	8.9	​
Credit for FICA taxes paid on tips		(16.3)	​	(24.9)	​	(66.4)	​
Other credits and incentives		(1.0)	​	(2.2)	​	(10.7)	​
Deferred compensation		(1.6)	​	(2.4)	​	9.7	​
Equity compensation	​	1.2	​	1.5	​	5.5	​
Uncertain tax positions	​	(0.9)	​	(0.7)	​	(2.3)	​
Non-deductible executive compensation	​	1.0	​	0.8	​	2.8	​
Other		(0.1)	​	0.2	​	0.4	​
Effective tax rate		8.3	%	(1.3)	%	(31.1)	%

​

Following are the temporary differences that created our deferred tax assets and liabilities (in thousands):

​

​	​	​	​	​	​	​
​		December 31, 2024			January 2, 2024
Deferred tax assets:	​	​	​	​	​	​
Staff member benefits	​	$	40,500	​	$	35,932
Insurance reserves	​		15,244	​		14,931
Operating lease liability	​	​	335,034	​	​	324,587
Deferred income	​		39,248	​		38,074
Tax credit carryforwards	​		79,933	​		74,004
Goodwill	​		21,393	​		22,743
Stock-based compensation	​	​	10,788	​	​	10,789
State and foreign net operating loss carryforwards	​	​	1,331	​	​	1,640
Other	​	​	867	​	​	674
Subtotal	​		544,338	​		523,374
Less: Valuation allowance	​		(601)	​		(1,444)
Total	​	$	543,737	​	$	521,930
​	​	​	​	​	​	​
Deferred tax liabilities:	​	​	​	​	​	​
Property and equipment	​	$	(129,504)	​	$	(121,219)
Prepaid expenses	​		(8,435)	​		(8,933)
Inventory	​		(9,194)	​		(8,882)
Accrued rent	​	​	(5,867)	​	​	(5,889)
Operating lease asset	​	​	(291,991)	​	​	(284,244)
Other	​	​	(896)	​	​	(819)
Total	​	$	(445,887)	​	$	(429,986)
​	​	​	​	​	​	​
Net deferred tax asset	​	$	97,850	​	$	91,944

​

At December 31, 2024 and January 2, 2024, we had $79.8 million and $72.8 million, respectively of U.S. federal credit carryforwards which begin to expire in 2042 and $0.2 million and $1.6 million, respectively, of state hiring and investment credits which begin to expire in 2025. At December 31, 2024 and January 2, 2024, we had $1.9 million and $2.3 million, respectively of foreign net operating loss carryforwards which begin to expire in 2037 and $23.7 million and $27.4 million, respectively, of state net operating loss carryforwards with statutory carryforward periods ranging from 5 years to no expiration period. The earliest year that a material state net operating loss will expire is 2032.

We assess the available evidence to estimate if these carryforwards and our other deferred tax assets will be realized. We concluded that a substantial portion of our deferred tax assets are more likely than not to be realized by reversals of existing taxable temporary differences and that forecasted future taxable income, exclusive of reversing temporary differences, will result in realization of a substantial portion of the remainder. We did not need to consider tax planning strategies in this analysis. Based on this evaluation, at December 31, 2024 and January 2, 2024 we carried a valuation allowance of $0.6 million and $1.4 million, respectively, to reflect the amount that we will likely not realize. This assessment could change if estimates of future taxable income during the carryforward period are revised. The earliest tax year still subject to examination by a significant taxing jurisdiction is 2015.

​

At December 31, 2024, we had a reserve of $3.4 million for uncertain tax positions, all of which would favorably impact our effective income tax rate if resolved in our favor. A reconciliation of the beginning and ending amount of our uncertain tax positions is as follows (in thousands):

​

​	​	​	​	​	​	​	​	​	​
​		Fiscal Year
​		2024			2023			2022
​	​	​	​	​	​	​	​	​	​
Balance at beginning of year	​	$	3,847	​	$	3,787	​	$	4,799
(Reductions)/additions related to prior year tax positions	​	​	(419)	​	​	181	​	​	227
Reductions related to current period tax positions	​		(32)	​		(121)	​		(54)
Reductions related to settlements with taxing authorities	​		—	​		—	​		(1,185)
Balance at end of year	​	$	3,396	​	$	3,847	​	$	3,787

​

At December 31, 2024 and January 2, 2024, we had $0.1 million and $1.4 million, respectively, of accrued interest and penalties related to uncertain tax positions.

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The entire disclosure for income tax.

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