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Income Taxes | 12 Months Ended
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Oct. 02, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | 9. Income Taxes The components of income tax benefit (expense) were as follows for the fiscal years presented:
(in thousands) | 2021 |  | 2020 |  | 2019
Current tax provision: |  |  |  |  |
Federal | $ | 348 |  |  | $ | (1,425) |  |  | $ | 156 |
State | (82) |  |  | (65) |  |  | (985) |
Foreign | — |  |  | — |  |  | (112) |
Total current tax benefit (expense) | $ | 266 |  |  | $ | (1,490) |  |  | $ | (941) |
Deferred tax provision: |  |  |  |  |
Federal | $ | 604 |  |  | $ | (715) |  |  | $ | (5,844) |
State | 321 |  |  | 686 |  |  | (788) |
Total deferred tax benefit (expense) | 925 |  |  | (29) |  |  | (6,632) |
Income tax benefit (expense) | $ | 1,191 |  |  | $ | (1,519) |  |  | $ | (7,573) |
At October 2, 2021, the Company had $8.9 million in state tax credit carryforwards and $0.5 million federal tax credit carryforwards. The Company maintains a partial valuation allowance on the state tax credit carryforwards. Of this balance, the Company estimates approximately $3.6 million of state tax credit carryforwards will expire unused between 2028 and 2031. At October 2, 2021, the Company had $16.5 million in state net operating loss ("NOL") carryforwards and $1.0 million Federal NOL carryforwards. Of this balance, the Company estimates approximately $10.9 million of state NOL carryforwards will expire unused between 2028 and 2033. The effective tax rates for fiscal 2021, fiscal 2020 and fiscal 2019 were 60.2%, 14.5% and 25.6%, respectively. The effective tax rate for fiscal 2021 differed from the statutory Federal income tax rate of 21.0%. There were several items that increased the effective tax rate to 60.2%, including the impacts of tax credits, return to accrual adjustments, and state taxes on the Federal rate. These increases were partially offset by a change in uncertain tax positions. The effective tax rate for fiscal 2020 differed from the statutory Federal income tax rate of 21%. There were minor items that lowered the effective tax rate to 14.5%, primarily the impacts of tax credits and state taxes on the Federal rate. These decreases were offset to a lesser degree by the recording of a partial valuation allowance for state taxes and minor return to accrual adjustments. The effective tax rate for fiscal 2019 differed from the statutory federal income tax rate of 21%, mainly due to the unfavorable impact of valuation allowances, share-based and other compensation limitations, and state taxes, which included the application of tax credits claimed as offsets against our payroll tax liabilities. The valuation allowance increased mainly due to the accrual of income tax credits that were greater than our ability to utilize before expiration. These items were partially offset by benefits from Federal and state tax credits. A reconciliation between the reported income tax benefit (expense) and the amount computed by applying the statutory federal income tax rate is as follows:
(in thousands) | 2021 |  | 2020 |  | 2019
Federal tax benefit (expense) at statutory rate | $ | 415 |  |  | $ | (2,203) |  |  | $ | (6,223) |
(Increase) reduction in income tax expense resulting from: |  |  |  |  |
State taxes, net | 552 |  |  | 1,508 |  |  | (611) |
Change in uncertain tax positions | (635) |  |  | — |  |  | — |
Share-based compensation | (135) |  |  | 188 |  |  | (320) |
Permanent items | (20) |  |  | (33) |  |  | (59) |
Valuation allowance | — |  |  | (977) |  |  | (1,043) |
Tax credits | 450 |  |  | 390 |  |  | 470 |
Return to accrual adjustments | 476 |  |  | (260) |  |  | 115 |
Investor tax on non-consolidated affiliate income | (28) |  |  | (185) |  |  | 14 |
Tax rate adjustments | — |  |  | — |  |  | (32) |
Other | 116 |  |  | 53 |  |  | 116 |
Income tax benefit (expense) | $ | 1,191 |  |  | $ | (1,519) |  |  | $ | (7,573) |
The guidance for accounting for uncertainty in income taxes requires that a determination be made regarding whether a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination, which is the threshold required for recognition of the tax position in the financial statements. During fiscal 2021, management obtained additional information that resulted in a conclusion that certain tax positions previously recognized in specific prior year financial statements may be subject to adjustment in conjunction with an examination. Accordingly, such determination resulted in the derecognition of these tax positions during fiscal 2021. The Company's liability arising from uncertain tax positions ("UTPs"), including accrued interest and penalties, is recorded in other liabilities in the Consolidated Balance Sheets. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in thousands) | 2021 |  | 2020 |  | 2019
Balance, beginning of year | $ | — |  |  | $ | — |  |  | $ | — |
Additions for tax positions of prior years | 370 |  |  | — |  |  | — |
Balance, end of year | $ | 370 |  |  | $ | — |  |  | $ | — |
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were accrued interest and penalties of $0.3 million at October 2, 2021 and none at October 3, 2020. The Company is subject to taxation mostly in the U.S. and various state jurisdictions. At October 2, 2021, tax years prior to 2015 and 2018 are generally no longer subject to examination by Federal and most state tax authorities, respectively. The following table sets forth the sources of and differences between the financial accounting and tax bases of the Company’s assets and liabilities which give rise to the net deferred tax assets at the dates indicated:
(in thousands) | October 2, 2021 |  | October 3, 2020
Deferred tax liabilities |  |  |
Property, plant and equipment | $ | (10,475) |  |  | $ | (11,029) |
Other intangible assets | (12,060) |  |  | (11,807) |
Investor tax on non-consolidated affiliate income | (692) |  |  | (668) |
Other assets | (105) |  |  | (135) |
Total deferred tax liabilities | $ | (23,332) |  |  | $ | (23,639) |
Deferred tax assets |  |  |
NOL carryforward | $ | 1,126 |  |  | $ | 600 |
Accrued expenses | 6,941 |  |  | 8,419 |
Compensation | 6,691 |  |  | 11,416 |
Interest limitation carryforward | 1,071 |  |  | — |
Inventories | 760 |  |  | 1,017 |
Unearned income | 3,488 |  |  | 3,444 |
Tax credits | 7,448 |  |  | 6,307 |
Total deferred tax assets | $ | 27,525 |  |  | $ | 31,203 |
Less: valuation allowance | (3,453) |  |  | (3,453) |
Deferred tax assets less valuation allowance | $ | 24,072 |  |  | $ | 27,750 |
Net deferred tax assets | $ | 740 |  |  | $ | 4,111 |

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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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