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Income Taxes | 12 Months Ended
--- | ---
Dec. 26, 2020
Income Tax Disclosure [Abstract] |
Income Taxes |
K. | Income Taxes
Significant components of the provision for income taxes are as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in thousands) |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 25,115 |  |  | $ | 18,510 |  |  | $ | 4,471 |
State |  |  | 9,455 |  |  |  | 8,084 |  |  |  | 4,894 |
Total current |  |  | 34,570 |  |  |  | 26,594 |  |  |  | 9,365 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 16,363 |  |  |  | 8,081 |  |  |  | 12,860 |
State |  |  | 1,337 |  |  |  | (346 | ) |  |  | 1,398 |
Total deferred |  |  | 17,700 |  |  |  | 7,735 |  |  |  | 14,258 |
Total provision for income taxes |  | $ | 52,270 |  |  | $ | 34,329 |  |  | $ | 23,623 |
The Company’s reconciliations to statutory rates are as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
Statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State income taxes, net of federal benefit |  |  | 4.4 |  |  |  | 4.6 |  |  |  | 4.6 |
Deduction relating to excess stock based compensation |  |  | (4.3 | ) |  |  | (3.2 | ) |  |  | (3.6 | )
Non-deductable meals & entertainment |  |  | 0.2 |  |  |  | 0.7 |  |  |  | 1.1 |
Accounting method changes |  |  | — |  |  |  | — |  |  |  | (3.9 | )
Change in valuation allowance |  |  | 0.1 |  |  |  | 0.4 |  |  |  | 0.7 |
Other |  |  | — |  |  |  | 0.3 |  |  |  | 0.4 |
|  |  | 21.4 | % |  |  | 23.8 | % |  |  | 20.3 | %
Due to a change of tax accounting methods for depreciation of certain property, plant and equipment for the fiscal year-ended December 30, 2017, the Company experienced a one-time income tax benefit of $4.5 million for the tax year ended December 29, 2018. Significant components of the Company’s deferred tax assets and liabilities are as follows at:
|  | December 26, 2020 |  |  | December 28, 2019 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Lease Liabilities |  | $ | 17,951 |  |  | $ | 15,567 |
Inventory |  |  | 2,525 |  |  |  | 5,868 |
Stock-based compensation expense |  |  | 5,568 |  |  |  | 5,818 |
Accrued expenses |  |  | 3,171 |  |  |  | 3,232 |
Other |  |  | 2,212 |  |  |  | 1,914 |
Total deferred tax assets |  |  | 31,427 |  |  |  | 32,399 |
Valuation allowance |  |  | (2,022 | ) |  |  | (1,866 | )
Total deferred tax assets net of valuation allowance |  |  | 29,405 |  |  |  | 30,533 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property, plant and equipment |  |  | (88,947 | ) |  |  | (78,232 | )
Right-of-use Assets |  |  | (15,695 | ) |  |  | (14,203 | )
Amortization |  |  | (12,900 | ) |  |  | (10,899 | )
Prepaid expenses |  |  | (4,528 | ) |  |  | (2,209 | )
Total deferred tax liabilities |  |  | (122,070 | ) |  |  | (105,543 | )
Net deferred tax liabilities |  | $ | (92,665 | ) |  | $ | (75,010 | )
The Company’s practice is to classify interest and penalties related to income tax matters in income tax expense. Interest and penalties included in the provision for income taxes amounted to $0.0 million, $0.0 million, and $0.1 million for fiscal years 20 20, 201 9, and 201 8, respectively. Accrued interest and penalties amounted to $0.2 million and $0.1 million at December 2 6, 20 20 and December 28, 2019, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | 2020 |  |  | 2019 |
|  | (in thousands) |
Balance at beginning of year |  | $ | 811 |  |  | $ | 836 |
Increases related to current year tax positions |  |  | — |  |  |  | 101 |
Increases (decreases) related to prior year tax positions |  |  | 13 |  |  |  | (63 | )
Decreases related to lapse of statute of limitations |  |  | (12 | ) |  |  | (63 | )
Balance at end of year |  | $ | 812 |  |  | $ | 811 |
Included in the balance of unrecognized tax benefits at December 26, 2020 and December 28, 2019 are potential net benefits of $0.8 million and $0.8 million, respectively, that would favorably impact the effective tax rate if recognized. Unrecognized tax benefits are included in accrued expenses in the accompanying consolidated balance sheets and adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded. In September 2017, the Internal Revenue Service (“IRS”) commenced an examination of the Company’s 2015 consolidated corporate income tax return. The examination was completed in July 2018 resulting in a no change report. As of December 26, 2020, the Company’s 2017, 2018, and 2019 federal income tax returns remain subject to examination by IRS. 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 is being audited by one state as of December 26, 2020. In addition, the Company is generally obligated to report changes in taxable income arising from federal income tax audits. It is reasonably possible that the Company’s unrecognized tax benefits may increase or decrease in 2020 if there are changes as a result of potential income tax audits; however, the Company cannot estimate the range of such possible changes. The Company does not expect that any potential changes would have a material impact on the Company’s financial position, results of operations or cash flows. As of December 26, 2020, the Company’s deferred tax assets included a capital loss carryforward totaling $1.1 million. If unused, the capital loss carryforward will expire in fiscal year 2021.

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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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