Income Taxes

9 Months Ended

Sep. 26, 2020

L. Income Taxes

As of September 26, 2020 and December 28, 2019, the Company had approximately $0.8 million and $0.8 million, respectively, of unrecognized income tax benefits.

The Company’s practice is to classify interest and penalties related to

income

tax matters in income tax expense. As of September 26, 2020 and December 28, 2019, the Company had $0.2 million and $0.1 million, respectively, accrued for interest and penalties recorded in other liabilities.

The Internal Revenue Service completed an examination of the

Company’s

2015 consolidated corporate income tax return and issued a no change report in 2018. The Company’s state income tax returns remain subject to examination for three or four years depending on the state’s statute of limitations. The

Company

was

not under any income tax audits as of September 26, 2020.

The

Company is generally obligated to report changes in taxable income arising from federal income tax audits.

The following table provides a summary of the income tax provision for the thirteen and thirty-nine weeks ended September 26, 2020 and September 28, 2019:


	Thirteen weeks ended
	September 26,			September 28,
	2020			2019
	(in thousands)
Summary of income tax provision
Tax provision based on net income	$	26,325		$	16,047
Benefit of ASU 2016-09		(5,142	)		(1,842	)

Total income tax provision	$	21,183		$	14,205


	Thirty-nine weeks ended
	September 26,			September 28,
	2020			2019
	(in thousands)
Summary of income tax provision
Tax provision based on net income	$	52,029		$	34,455
Benefit of ASU 2016-09		(9,481	)		(3,870	)

Total income tax provision	$	42,548		$	30,585

The Company’s effective tax rate for the thirteen weeks ended September 26, 2020, decreased to 20.8% from 24.1% for the

thirteen

weeks ended September 28, 2019, primarily due to higher tax benefit from stock option activity recorded in accordance with ASU

2016-09.

The Company’s effective tax rate for the thirty-nine weeks ended September 26, 2020, decreased to 21.1% from 24.1% for the thirty-nine weeks ended September 28, 2019, also primarily due to higher tax benefit from stock option activity recorded in accordance with ASU

2016-09.

- 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.

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